Crude rebounded on Tuesday, lifted by renewed geopolitical concerns and in advance of closely-watched U.S. oil inventory data.
A day after prospects for a resumption of Libyan supply prompted its biggest daily fall in nearly a month. Hopes for a relaxation of sanctions on Iran later this year, enabling the Islamic Republic to sell more oil, were dampened after the United States targeted companies from China and Dubai for allegedly helping Tehran evade weapons and oil sanctions. That sent a signal that Washington will keep pressure on Iran over its nuclear program.
rose by about $1 to hold near $109 a barrel, after a 1.4 percent drop on Monday. U.S. crude for June delivery rose 44 cents to settle at $101.28 a barrel.
The stand-off between Russia and Western powers over Ukraine also showed no sign of abating, adding to concerns that the conflict will ultimately lead to the disruption of some oil supply due to tighter sanctions. Hundreds of pro-Russian separatists stormed the regional government headquarters in Ukraine's eastern city of Luhansk on Tuesday, gaining access by breaking windows and facing no resistance from police.
In the United States, investors will be watching the latest oil inventory data. Crude stocks at Cushing, Oklahoma, which touched a five-year low, helped Brent's premium to U.S. crude to narrow as new pipelines have diverted oil from the delivery point for West Texas Intermediate contracts to the Gulf Coast.
However, total U.S. stockpiles are set to post a fresh high, with U.S. commercial crude stockpiles forecast to have risen 1.9 million barrels last week, a preliminary Reuters poll of six analysts showed.
Crude inventories hit 397.7 million barrels the previous week, the highest since records began over 30 years ago.
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