Brent above $105 on lower China inflation

Brent crude futures rose above $105 per barrel today after data showed China's inflation in March was slower than expected, giving its central bank room to keep monetary policy easy and support oil demand in the world's second-biggest consumer.

Oil prices were also supported by worries over increasing tension in North Korea and a stalemate in talks between Iran and Western nations.

"The softer-than-expected inflation is supportive to oil markets," said Ben Le Brun, a market analyst at OptionsXpress in Sydney. "As the potential to tighten policy may now be on the back burner, this is more of a short-term relief."

Front-month Brent futures rose 47 cents to $105.13 per barrel by 03.15 GMT, after moving in a $2-range in a choppy session on Monday. US crude futures rose 20 cents to $93.55 per barrel.

Brent may trade between $103 and $110 per barrel in coming weeks, LeBrun added.

China's annual consumer inflation eased to 2.1 per cent in March from February's 3.2 per cent while producer price deflation deepened, data showed on Tuesday.

The data is likely to reduce the anxiety building among some investors that China's policymakers may begin tightening monetary conditions early in the recovery cycle, especially amid concerns of a bubble in the property market.

With other data from China pointing to a moderate recovery, demand worries from the West, following weaker than expected jobs numbers from the United States and problems in Europe, may be mitigated somewhat.

Still, global oil demand is expected to pick up from the third quarter, analysts say.

Oil markets are also awaiting key US inventory data for the week ended April 5, due today and tomorrow. Data for the previous week had shown an inventory build-up last seen in 1990, dragging oil prices down to an eight-month low on Friday.

Reuters