Oil held near $108 a barrel on Thursday as weaker-than-expected Chinese economic data offset worries about disruption of supply prompted by the stand-off between Russia and Western powers over Ukraine. Brent crude was down 22 cents to $107.80 at 1453 GMT, after ending 53 cents down at its lowest in a week. US crude was up 28 cents to $98.27.
The US contract plunged more than 2 percent on Wednesday, its biggest drop in two months, on a surprise plan for a test release of US strategic oil reserves, while weekly data showed a big rise in crude stockpiles. In the first test sale of crude from its emergency oil stockpile since 1990, the United States is offering a modest 5 million barrels, in what some observers saw as a message to Russia from the Obama administration.
Germany's Angela Merkel warned Moscow that it risked "massive" political and economic damage if it refused to change course on Ukraine, saying Western leaders were united in their readiness to impose sanctions on Russia if necessary. Worries that escalation of the dispute could lead to disruption of supplies of oil from Russia, one of the world's largest oil producers, have underpinned prices.
"Ukraine is a supportive factor as are slightly higher global demand figures from Opec," said Andy Sommer, an analyst at Axpo Trading in Dietikon, Switzerland. Sommer was referring to figures from the Organisation of the Petroleum Exporting Countries showing that world oil demand would increase more than expected in 2014, raising its prediction for a second straight month as economic growth picks up in Europe and the United States.
However on a shorter-term outlook, demand looks more subdued, Sommer said. "There are demand worries around China, and it's a weaker seasonal period for demand, especially in the United States now that the heating oil season is coming to an end," Sommer said. Implied oil demand in China, the world's second-biggest oil consumer, fell 3.1 percent in the January-February period from a year earlier to roughly 9.98 million barrels per day (bpd), according to Reuters' calculations based on preliminary government data.
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