Prices underpinned by worries over Mideast supplies as the conflict in Syria worsens
Brent crude futures steadied above $104 per barrel on Wednesday, as upbeat US housing and consumer confidence data sparked expectations of improved demand from the world's top consumer.
Prices were also underpinned by worries over Middle East supplies as the conflict in Syria worsened. The long-term outlook, however, looked weak on expectations of ample supply from the US shale gas boom and uncertain demand growth.
"People are starting to realize that the US has got to lead us out of this economic slump," said Tony Nunan, an oil risk manager at Mitsubishi in Tokyo.
"The main worries are unemployment and housing, and housing seems to be on a steady growth path. That and the geo-political risk is keeping prices supported."
Front-month Brent futures slipped 14 cents to trade at $104.09 per barrel at 0415 GMT after rising as much as $2 in the previous session. U.S. crude shed 25 cents to $94.76.
Data on Tuesday showed that US home prices accelerated by the most in nearly seven years in March as spring buying gave the sector traction, while surging consumer confidence pointed to a resilient recovery.
Worries about global economic health, particularly after poor manufacturing numbers out of China and fears that the US Federal Reserve may begin scaling back its rally-spurring easy money programme, have weakened oil markets this year.
Brent is down more than 12 percent from this year's high of over $119 in February, while US crude has lost more than 3 percent from its January high above $98.
Prices have found a floor because of the worsening conflict in Syria, which has kept concerns of supply disruptions from the oil-rich Middle East region simmering.
In the latest developments, Britain and France said on Tuesday they did not have to wait until Aug. 1 to arm rebels fighting Syrian President Bashar al-Assad, and Russia said it won't scrap plans to deliver an air defence system to the conflict-ridden nation.
The longer term outlook for oil remains weak as activity in the larger economies, mainly the United States, Europe and China has still not picked up to a level that could spur oil demand growth, while supplies from the US shale oil revolution will keep markets well supplied, analysts said.
Technical indicators also point to a drop. Brent failed to break through a resistance level of $104.69 and is expected to retrace to $103.29, said Reuters technical analyst Wang Tao.
US crude may drop to $94.07 per barrel and may extend the drop to $93.09, Wang Tao said.