Oil gets bounce on inventory expectations, Ukraine tensions

Source: Denver International Airport

U.S. crude oil surged on Tuesday ahead of weekly inventory reports that were expected to show gasoline stocks fell, while Brent gained as fresh unrest in eastern Ukraine heightened tensions between Russia and the West again.

U.S. Secretary of State John Kerry said Russian agents were behind separatist unrest in eastern Ukraine and accused Moscow of preparing for military action there. The statements sparked a verbal backlash from Russia, the world's biggest oil producer.

Investors worry that any deep diplomatic rift between Moscow and the West could lead to further economic sanctions. However, Brent prices were capped by hopes that Libya would soon resume oil exports after the government reached agreements with rebel groups.

Brent crude for May delivery rallied by nearly $2, jumping to near $108 a barrel. U.S. crude for May soared by $2.12 percent to settle at $102.56 a barrel, its highest since March 7.

Is the era of 'easy oil' over?

In the United States, support also came from expectations that government data due out on Wednesday would show another draw at the Cushing, Oklahoma, delivery point for the American benchmark.

The oil price gains came amid a broad retreat in global equity markets and a weakening of the U.S. dollar, with investors turning to oil for exposure to global economic growth.

Crude prices dropped on Monday due to the prospect of additional Libyan supplies after rebels agreed to end gradually their eight-month blockade of oil ports accounting for around 700,000 barrels per day.However, Libya's National Oil Corp had not yet lifted a force majeure at the eastern ports on Tuesday.

For more information on commodities prices, please click here.