London - Global oil prices rallied on Wednesday on Ukraine tensions and the weak dollar, and before weekly crude inventories data in top consumer the United States.
New York's main contract, West Texas Intermediate (WTI) for May delivery, hit $104.82 a barrel Ä the highest level since early March.
Brent North Sea crude for May rallied to a similar one month peak at $110.20 a barrel.
The WTI contract later stood at $104.69, up 94 cents from Tuesday's closing level. Brent meanwhile pulled back to $110.08 in London morning deals, but still 72 cents higher compared with the previous day's finish.
“Crude oil prices have extended gains for a third consecutive session today, supported by a weaker US dollar and persistent tensions in Ukraine, which have raised concerns over oil supplies in the region,” said Sucden brokers analyst Myrto Sokou.
In foreign exchange, the dollar fell versus the euro as investors bet against the European Central Bank implementing stimulus measures any time soon, dealers said.
The weaker dollar makes dollar-priced crude cheaper for buyers using stronger currencies, which tends to stimulate demand and oil price levels.
Tensions over Ukraine meanwhile outweighed news of falling Chinese economic growth and oil demand in the first quarter of 2014.
Russian President Vladimir Putin warned that Ukraine was on the verge of civil war as Kiev launched a military operation against pro-Kremlin militants in the separatist east.
Ukraine's defence ministry said on Wednesday that pro-Russian militants had taken two of its soldiers “hostage” in the separatist eastern region of Lugansk.
Traders are concerned that any full-scale armed conflict would disrupt supplies and send oil and gas prices rocketing, because Ukraine is a major conduit for Russian gas to Western Europe.
“WTI fell below the $103 per barrel level during Tuesday's trading session, with investors worrying over Chinese data which showed a reduced pace of economic growth,” said Capital Spreads analyst Jonathan Sudaria.
“The fall in prices was short lived due to mounting tensions in Ukraine with the country on the brink of civil war.”
The oil market had also fallen on Tuesday on signs that Libya was about to resume oil exports, but Russia-Ukraine tensions acted to curb selling.
Crude futures had however marched higher on Monday on simmering tensions between Kiev and Moscow.
Dealers are also awaiting the latest US stockpiles report out later Wednesday for clues about demand in the world's biggest economy.
The US Energy Information Administration is expected to report that gasoline stocks fell 1.4 million barrels in the week to April 11, according to analysts surveyed by The Wall Street Journal.
Crude supplies are expected to rise 1.5 million barrels, as processing is curtailed by refinery maintenance.
Sapa-AFP