- Brent oil rose above $108 a barrel on Thursday with a sharp drop in U.S. crude stockpiles boosting the demand outlook in the world's top oil consumer while tougher U.S. sanctions on Russia raised geopolitical concerns.
Continued worries about the political situation in Libya and Iraq also underpinned oil prices.
Brent for September, which became the front-month contract on Thursday, rose by $1 to $108.17 by 1247 GMT. The August contract, which expired on Wednesday, dropped 17 cents to settle at $105.85 a barrel.
U.S. crudeknown as WTI, which is sensitive to domestic inventory data, climbed $1.74 to near $103.
"There were stock draws in the United States, which is why WTI is up more than Brent. There is also the issue of Russian sanctions," said Christopher Bellew, trader at Jefferies Bache.
"But I'm not certain Brent will stay here too long because we are in a contango," he said, referring to a market structure where future prices are seen higher than the front month, encouraging traders to store volumes and wait for price rises.
Oil prices have been on the increase after data released on Wednesday showed a larger-than-expected drawdown in overall U.S. stockpiles and at the Cushing, Oklahoma delivery hub.
A rise in U.S. refining activity caused crude stocks to fall by 7.5 million barrels last week, the biggest draw since January and larger than the 2.1 million drawdown forecast by analysts, data from the U.S. Energy Information Administration showed.
At the same time, geopolitical tensions are on the rise over Ukraine, with the United States imposing sanctions on some of Russia's biggest firms for the first time, striking at the heart of President Vladimir Putin's power base.
Rosneft, Russia's largest oil producer, was among firms targeted by further U.S. sanctions announced on Wednesday while Europe agreed to impose its own package.
Source: Reuters
Continued worries about the political situation in Libya and Iraq also underpinned oil prices.
Brent for September
U.S. crude
"There were stock draws in the United States, which is why WTI is up more than Brent. There is also the issue of Russian sanctions," said Christopher Bellew, trader at Jefferies Bache.
"But I'm not certain Brent will stay here too long because we are in a contango," he said, referring to a market structure where future prices are seen higher than the front month, encouraging traders to store volumes and wait for price rises.
Oil prices have been on the increase after data released on Wednesday showed a larger-than-expected drawdown in overall U.S. stockpiles and at the Cushing, Oklahoma delivery hub.
A rise in U.S. refining activity caused crude stocks to fall by 7.5 million barrels last week, the biggest draw since January and larger than the 2.1 million drawdown forecast by analysts, data from the U.S. Energy Information Administration showed.
At the same time, geopolitical tensions are on the rise over Ukraine, with the United States imposing sanctions on some of Russia's biggest firms for the first time, striking at the heart of President Vladimir Putin's power base.
Rosneft
