Geopolitical tensions help keep Brent above $110

Geopolitical tensions over Ukraine and Libya in addition to steep drawdown in US gasoline stockpiles revived hopes of steady demand growth in the world’s top oil consumer helped keep Brent futures above $110 a barrel.

US gasoline stocks fell 1.8 million barrels, data from the Energy Information Administration showed, compared with expectations of a 300,000-barrel gain, indicating a strong start to the summer driving season.

Investors still caution that oil may be prone to a correction following gains in the last few weeks on supply disruption concerns. In Ukraine, investors worry that any worsening in the crisis will further escalate tensions between Russia, the world’s second-largest oil exporter, and the West. Concerns of continued disruption to North African exporter Libya were countered by expectations of rising Middle East supply.

Iran’s crude exports increased in May after a decline in April, according to sources who track tanker movements. Iran’s exports have averaged 1.38 million barrels per day in May. That represents an increase from 1.1 million bpd in April.

Brent crude gained 7 cents to $110.04 a barrel and is set to rise nearly 2 percent for the month. US oil slipped 21 cents to $103.37, partly under pressure from an overall rise in US crude stocks and gains overnight. It is set to rise nearly 4 percent this month.

Total US crude inventories rose 1.7 million barrels compared with analysts’ expectations for an increase of 500,000 barrels. But crude stocks at the Cushing, Oklahoma, delivery hub fell 1.53 million barrels, the EIA said.