Investors are waiting for confirmation of industry data that showed US gasoline stocks posted a surprise fall last week, and are also keeping an eye on the outcome of a meeting of producer group OPEC.
Brent futures had gained $0.18 to $109.70 per barrel by Wednesday morning, after sliding 0.5% lower.
US oil added $0.10 to $104.45. It rose to an intraday high of $105.06 in the previous session, inching close to the high for the year at $105.22.
“Oil demand is likely to be stronger, especially in the second half of the year, driven by higher consumption in the United States and China” IHS Energy Insight vice president energy consultancy Victor Shum told Reuters.
“There is more supply as output in North America ramps up, but that is only offsetting the fall in output in Libya and elsewhere. Overall, the oil market looks well supported.”
Gasoline stocks fell by 441,000 barrels compared with expectations for an 843,000-barrels gain, data from the American Petroleum Institute showed.
That helped offset the impact from a rise in crude stocks by 1.45 million barrels, versus forecasts of a decrease of 1.9 million barrels.
The market is now waiting official data from the Department of Energy’s Energy Information Administration for confirmation and to assess the country’s consumption outlook.
Higher demand comes against a backdrop of rising supplies.
Total US crude oil production in May reached the its strongest levels in 26 years, hitting an average of 8.4 million barrels per day, the US Energy Information Administration said in a monthly short-term energy outlook.
It also said its 2015 forecast of 9.27 million bpd was the highest annual average level of oil production since 1972.
Iran put OPEC on notice of its plans to raise output swiftly with the help of foreign investors immediately after any lifting of sanctions imposed over its nuclear programme. Oil Minister Bijan Zanganeh said Iran could increase oil exports by 500,000 barrels per day straight after sanctions were lifted.
But oil prices remained largely unfazed by the expected rise due to ongoing disruptions in supplies from key exporters and simmering geopolitical tensions.
“There could be a lot of supply coming into the market if the situation in Libya improves and if sanctions are lifted on Iran. But there are a lot of ifs,” Shum said.
OPEC, which pumps more than a third of the world’s oil, is meeting in Vienna to agree policy for the second half of the year.
Ministers have said they will leave the output target of 30 million barrels per day unchanged, and that the market is well-supplied.