Crude oil higher on supply report, Iran

Investing.com - Crude oil futures traded higher Wednesday, after a U.S. government report showed a smaller-than-expected increase in U.S. oil supplies, while traders continued to monitor Iran and Greece’s debt swap deal.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.97 a barrel during U.S. morning trade, adding 1.22%.

It earlier fell by as much as 0.85% to trade at USD104.36 a barrel, the lowest since February 17. 

Crude prices traded at USD104.49 prior to the release of the Energy Information Administration data.

The U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 0.8 million barrels in the week ended March 2, below expectations for a 1.5 million barrel increase. U.S. crude supplies rose by 4.2 million barrels in the preceding week. 

Total U.S. crude oil inventories stood at a five-month high of 345.7 million barrels as of last week, remaining in the upper limit of the average range for this time of year.

Meanwhile, investors remained wary ahead of Thursday’s deadline for Greece’s private creditors to agree to a bond swap deal, aimed at eliminating 53.5% of the country's EUR177 billion debt.

Oil prices continued to draw support from concerns over a potential disruption to oil supplies from Iran and worries over its nuclear program.

Growing tensions between Iran and Israel also remain in focus.  Fears exist that an escalation of hostilities between Israel and Iran could set off a conflict across the region sending oil prices skyrocketing.

Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.

Also Wednesday, a report by U.S. payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 216,000 in February, beating expectations for an increase of 205,000. 

The previous month’s figure was revised up to a gain of 173,000 from a previously reported increase of 170,000.

Oil prices were higher during the Asian trading session after China’s trade ministry said the country plans to boost energy imports in 2012. 

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was up 1.46% to trade at 123.77 a barrel, with the spread between the Brent and crude contracts standing at USD17.80.