Oil turned higher on Wednesday with Brent crude climbing above $113 a barrel after weekly U.S. government inventory figures an unexpected draw in stocks of distillates, which include heating oil and diesel
Distillate stockpiles fell 2.04 million barrels versus expectations for a 100,000 barrel build, the Energy Information Administration (EIA) data showed.
Gasoline stocks rose 3.79 million barrels versus a forecast for a 300,000 barrel build, appearing to highlight concerns high prices were eroding U.S. consumption, The season higher gasoline usage is usually measured from the Memorial Day holiday which falls this weekend.
The market is holding up despite the report... With tight distillate supplies in China and Europe, it could be heating oil and not gasoline that leads this market, said Mike Zarembski, a senior commodities analyst at Optionsxpress, Chicago.
Brent crude for July was up $1.47 at $114 a barrel at 1519 GMT, up from as low as $111.14 a barrel earlier in the session. U.S. crude was up 69 cents at $100.28 a barrel, up from a low of $98.26.
Attention was also redirected to the Middle East as unrest escalated in Yemen and as NATO strikes intensified over Libya.
The bombing continues in Libya and the unrest in Yemen and Syria, which impacts the Brent market and helping keep Brent supported, but we've seen some pretty weak economic data so the demand side of the equation is not looking so great, said Phil Flynn, analyst at PFGBest Research in New York.
Sharp upward revisions of oil price forecasts by Wall Street giants Goldman Sachs and Morgan Stanley have deepened the schism between oil bears and bulls to levels unseen since oil prices peaked in 2008, a Reuters monthly poll showed.
While bears cited weak demand and ebbing geopolitical risk premiums as reasons for oil to plunge to $75 per barrel, bulls saw it soaring to $140 due to supply shortages and the limited ability of OPEC to cushion any new disruption.
A report on Wednesday showed a larger than expected drop in new orders for long-lasting U.S. manufactured goods in April, which recorded their largest decline in six months a government report showed on Wednesday.
The Memorial Day weekend is coming up and it's not looking that good for next week. Food and oil prices are putting big pressure on consumers and they are likely to drive less, said Christophe Barret, oil analyst at Credit Agricole Corporate and Investment Bank.
Falling consumption would prompt a correction in oil prices and forecasts that Brent will drop to $85 a barrel by the second half of the year, he said.
(Additional reporting by Francis Kan; editing by William Hardy)