Brent futures held near $104 a barrel

Singapore: Brent futures held near $104 a barrel on Thursday, as upbeat data worldwide renewed hopes of a revival in demand growth, while concerns of ample supplies weighed on prices.

Equities supported oil, with the S&P 500 closing at an all-time high for a fifth day on Wednesday following a slew of positive numbers from the United States, China and Germany.

With China’s inflation only a little above forecast, investors expect Beijing to hold to accommodative monetary policies that have allowed them to take up risk positions in share markets and oil.

Brent crude had slipped 21 cents to $104.13 a barrel by 0631 GMT. The benchmark is still just $2 off the one-month high of almost $106 a barrel touched early in the week when Israeli air strikes on Syria stoked supply fears.

US oil slipped 25 cents to $96.38.

“We are seeing oil largely holding on to gains after the recent series of positive numbers that has followed the strong US jobs data,” said Ric Spooner, chief markets analyst at CMC Global Markets in Sydney.

“China’s inflation was broadly in line with expectations, and there seems to be nothing there to suggest that the government will introduce any measure to tame inflation.”

China’s annual consumer inflation quickened to 2.4 per cent in April, from March’s 2.1 per cent, due to higher food costs, data showed on Thursday.

The country’s central bank is widely expected to keep its policy neutral with some fine-tuning to support the economy.

German industrial output unexpectedly jumped in March, fanning hopes that Europe’s top economy is gaining traction after a disappointing end to 2012, helped by higher exports to the euro zone.

News that militants blew up a pipeline carrying Iraqi crude from Iraq’s northern city of Kirkuk to Turkey’s Mediterranean port of Ceyhan on Monday night, stopping the flow of oil, also added support.

Oil stocks at Cushing, Oklahoma, fell by 652,000 barrels to 49.15 million in the week ended May 3, data from the US Energy Information Administration showed on Wednesday.

Expectations that further capacity could suck more oil out of the storage hub to US refiners, narrowed the difference between the US benchmark and Brent to $7.72 in the previous session, the lowest settlement since January 2011.

“Stocks remain historically high, but signs of decline may indicate improving logistics and availability of supplies to refineries,” analysts at ANZ said in a note to clients.

Price outlook

Oil is unlikely to rise much beyond current levels as ample supplies weigh on sentiment, Spooner said.

Signals are neutral so long as Brent oil hovers above support at $103.77, while US oil faces resistance at $97.05, with only a break above that confirming a rise towards $99.19, said Reuters technical analyst Wang Tao.

Despite the fall in stocks in Cushing, overall US crude inventories jumped to a fresh record last week as domestic production continued to climb, the EIA data showed.

Commercial domestic crude stockpiles hit 395.5 million barrels, according to data from the EIA, the highest level since the agency began records in 1982.