Brent crude rose close to $110 a barrel on Wednesday due to mounting tensions in Ukraine, while prices for U.S. oil fell after a report showed a huge build in stockpiles in the world's largest oil consumer.
Ukrainian government forces and separatist pro-Russian militia staged rival shows of force in eastern Ukraine amid escalating rhetoric on the eve of crucial talks on the former Soviet state's future.
Brent crude has been buoyed by the tensions between Kiev and pro-Russian separatists in the east of the country. The Ukrainian government confirmed on Wednesday that six of its armoured vehicles were in the hands of Russian supporters.
Meanwhile, growing oil stockpiles in the United States have pulled benchmark prices there lower, as production hit the highest level in more than a quarter of a century, and imports continued to rise.
Crude oil stocks rose 10 million barrels to 394 million barrels in the week ending April 11, according to the Energy Information Administration (EIA), far more than the 2.3-million-barrel build expected by analysts. Inventories were boosted in part by a 5.2-million-barrel build on the Gulf Coast, to the highest level since the EIA began collecting data in 1990.
"(U.S.) crude imports were up again because we're seeing, in part, a rebound in the Houston Ship Channel tanker traffic after the recent incident," said Phil Flynn, analyst at Price Futures Group in Chicago, referring to an oil spill that shut the channel for five days at the end of March.
"The Ukraine (crisis) is still supportive," he added.
Brent crude for June delivery rose by a dollar earlier in the session but pared gains to trade up 49 cents at $109.85 a barrel by 12:54 p.m. EDT (1654 GMT), its highest level since March 4. The May contract expired on Tuesday.
U.S. crude for May delivery fell 35 cents to $103.40 a barrel. U.S. oil was up more than $1 before the EIA inventory report.
Brent's premium to U.S. West Texas Intermediate <CL-LCO1=R> crude grew on Wednesday to the widest level since March 26.
"For Brent/WTI, there is a growing realisation that the United States is not short of crude," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
LIBYA LOADINGS
Growing scepticism that Libyan exports can resume quickly or sustainably has also supported Brent.
A tanker started loading at Libya's eastern port of Hariga on Wednesday for the first time in nearly nine months, after a federalist group agreed to reopen the port last week.
But the larger terminals of Ras Lanuf and Es Sider remain in rebel hands and their fate is subject to further negotiations with the government of the OPEC exporter.
Fresh evidence of slowing economic growth in China, the world's second-largest economy and oil consumer, had put pressure on oil prices early in the day though the data was stronger than many had expected.
China said its gross domestic product grew by 7.4 percent in the first quarter, the slowest pace in 18 months but slightly ahead of market forecasts of a 7.3 percent rise.
"It's not necessarily a negative for oil, but it's not providing the support that was anticipated," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
A slowing economy dampened energy use in China as its implied oil demand fell 0.6 percent to 9.96 million barrels per day in the first quarter, forcing refiners to scale back crude runs and raise exports to trim high fuel stocks.
(Reporting by Edward McAllister in Los Angeles, Robert Gibbons in New York, Lin Noueihad in London; additional reporting by Florence Tan; Editing by William Hardy, Dale Hudson and Paul Simao)
