US-Russian tensions, supply fears keep Brent above $108

Brent oil prices reversed early losses to climb more than $1 a barrel as fighting in Ukraine and deteriorating relations between Russia and the United States ignited new fears of supply disruptions in the market. Russian Foreign Ministry said the United States was trying to influence international opinion through unfounded insinuations over the crisis in Ukraine.

Brent crude led spike in prices shortly after reports emerged that EU sources said European Council leader Herman van Rompuy has written to EU leaders saying any restrictions the bloc agrees on Russian access to sensitive technology should exclude natural gas.

While that news did not appear to pose a particular threat to oil flows, traders said it helped kick off a flurry of covering ahead of any further tension this week.

Brent crude for September delivery rose $1.32 to settle at $108.39 a barrel. US crude for September delivery gained 2 cents to settle at $102.09 a barrel, after falling as low as $101 a barrel earlier in the session. 

Continued violence in Libya and Israel provided further support for oil prices. In Libya, oil production has risen to 500,000 barrels per day, but there was no progress on reopening its Brega oil port after an agreement to end a protest there.

Oil prices were also supported by US Labor Department unemployment data, which suggested the economic recovery remained on track with initial weekly jobless claims at their lowest since February 2006.