Crude oil futures slipped on Wednesday after weekly data showed U.S. crude inventories hit a record high, though Brent managed to settle above $109 on support from the ongoing crisis in Ukraine.
The U.S. Energy Information Administration reported that U.S. crude stocks rose 3.5 million barrels to 397.6 million barrels, the highest levels since records began in 1982. The market had expected a build, and prices had tumbled on Tuesday.
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Brent crude for June delivery settled 16 cents lower at $109.11. On Tuesday, Brent had ended 68 cents lower on in its biggest daily drop in two weeks.
U.S. crude for June delivery settled 31 cents lower at $101.44 a barrel. On Tuesday, U.S. crude tumbled more than 2 percent as the May contract expired, its steepest decline in nearly four months.
"I think they're (EIA numbers) pretty bearish especially when you consider that refinery runs surged strongly in the Gulf Coast by almost 400,000 barrels per day (bpd) and imports were down and we still had a huge build (there)," said Dominick Chirichella, Senior Partner at Energy Management Institute.
"Part of it was built into the market yesterday so today was a bit anticlimactic. Prices were supported a little bit because we had another draw in Cushing," he said, referring to the Cushing, Oklahoma delivery point for the U.S. crude contract.
A slide in U.S. crude earlier in the day widened its discount to Brent to the biggest in a month. But prices recovered after the spread between the two benchmarks held its 200-day moving average of $8.18 a barrel. The moving average is a key technical indicator watched by traders.
Last week's peace deal in Ukraine formally ended on Wednesday as the government said an "Easter truce" was over, vowing to eliminate pro-Russian armed groups in the east of the country.
The crisis in Ukraine has supported oil prices due to fears Western powers may increase sanctions against Russia, the world's second-largest crude exporter.
China, the world's second-biggest oil consumer, reported a fourth straight monthly downturn in factory activity, but analysts also saw initial signs of stability due to government efforts to underpin growth.
"China is slowing down and that's a concern, but people don't expect it to fall off a cliff," said Tony Nunan, an oil risk manager at Mitsubishi Corp.
"Geopolitical concerns over Ukraine, unfinished issues such as Syria and Libya, are keeping prices supported."
The euro zone's private sector has started the second quarter on its strongest footing in nearly three years, surveys showed on Wednesday, led by growth in Germany this month after a slight slowdown in March.
Investors are also keeping an eye on Libya's progress in ramping up exports. The North African nation's oil production is around 220,000 barrels a day as several oilfields remain closed due to protests, a spokesman for state-run National Oil Corp said.
(By Sabina Zawadzki; Additional reporting by David Sheppard in Lonodon and Manash Goswami in Singapore; Editing by Dale Hudson, Keiron Henderson, Chris Reese and David Gregorio)