(Reuters) - Brent crude oil kept modest gains on Thursday, lifted by fears of supply disruptions due to rising tensions between the West and Iran, after shaking off data showing an unexpected build in U.S. crude stockpiles.

Brent firmed near $114 a barrel after having extended its session low with U.S. crude in the morning following the release of U.S. government data that showed a build in oil inventories in the week to December 30, countering forecasts that refiners had cut stockpiles for year-end tax purposes.

The market is focused on what is going on in the Middle East and little else and may be poised to break out from here, said Richard Ilczyszyn, chief market strategist and founder of iitrader.com in Chicago.

After European Union leaders agreed to halt purchases of Iranian crude to pressure Tehran on its nuclear program, Iran faced the prospect of cutbacks in its oil sales to China and Japan that would further threaten its economy.

Iran had threatened to halt shipping through the Strait of Hormuz if faced with greater sanctions, supporting crude prices in recent weeks. The United States has said it would counter any attempts to block the waterway and Saudi Arabia has pledged to increase output in case of a sudden supply cut.

By 2 p.m. EST, ICE Brent crude futures traded in London up 28 cents at $113.98 a barrel, bouncing off the session low of $112.58.

U.S. crude, which is less influenced than Brent by international developments and more by domestic oil inventories, was down 30 cents at $102.92, after falling to a session low of $101.95.

Brent's premium against U.S. crude widened to above $11 after closing at $10.48 on Wednesday.

Brent's trading volume rose 20 percent against its 30-day average, according to Reuters data. U.S. crude volume lagged and was down 14 percent from its 30-day average.


Oil's gains were supported by news of a potential national strike in Nigeria and a force majeure declared by Royal Dutch Shell (RDSa.L) on its Bonny Light crude exports from the OPEC member.

News that lenders to Swiss oil refiner Petroplus (PPHN.S) had extended the freeze on its borrowing to all credit lines on top of $1 billion choked off last week also added support for Brent.

Countering all this, U.S. crude stockpiles rose by 2.21 million barrels last week, against forecasts for a modest 200,000-barrel drawdown. Distillate and gasoline stocks increased more than expected.

The day's crop of economic data showed U.S. private employers rose more than expected in December and filings for unemployment benefits fell last week, but investors were cautious ahead of the nonfarm payrolls and unemployment report for December.

The report, due at 8:30 a.m. EST on Friday, was forecast in a Reuters poll to show that nonfarm payrolls rose 150,000 and the unemployment rate ticked up to 8.7 percent, from 8.6 percent in November.

A weak euro zone outlook due to sovereign funding concerns pulled the euro down to its lowest level against the dollar since September 2010, shackling U.S. crude lower while keeping Brent's gains limited.