Brent Holds Above $104, Pares Losses on Higher China Crude Imports

Brent oil steadied above $104 a barrel on Wednesday, recovering from earlier losses after data from China showed crude imports by the world's No.2 consumer rose in April, although concerns over faltering global demand growth kept gains in check.

China's daily crude imports in April rose 3.7 percent from a year ago and 3.5 percent versus March, customs data showed, as refiners took advantage of lower prices to replenish stocks.

Yet worries about consumption after the U.S. Energy Information Administration (EIA) cut its global demand growth forecast for 2013 weighed on sentiment.

Brent was unchanged at $104.40 a barrel by 0410 GMT, after hitting a low of $103.85 earlier in the day. It rose more than $7 in almost a week to just below $106 in the previous session on worries about supply disruption after Israeli air strikes on Syria. U.S. oil rose 20 cents to $95.82.

(Read More: Why Oil Isn't Sweating Syria: Traders React)

"We are going to see wide swings in prices, at around $100 for Brent, because fundamentally the market is extremely bearish while geopolitical concerns are providing support," said Tony Nunan, a risk manager at Mitsubishi.

"China's oil demand will continue to grow as the country gets wealthier, but their growth is getting offset by the slowdown in demand in the wealthy nations."

China shipped in 23.08 million tonnes, or 5.62 million barrels per day (bpd), of crude last month, up from 5.42 million bpd the same month a year ago and 5.43 million bpd in March.

But over the first four months of the year, crude imports fell 0.9 percent, partly due to a high base of first-quarter 2012 imports but also reflecting weaker demand amid concerns about the pace of China's economic recovery.

(Read More: US Crude May Hit $100 on Payrolls, Geo-Politics: Survey)

"China has shown that they have been savvy, they have been market-oriented in building inventories," Nunan said. "So if we see oil prices weakening further, China may step in to import more to build up its stockpile. Brent under $100 may be a buying opportunity."

The price of Brent fell to around $102 a barrel at end-April from around $110 a barrel at the beginning of the month, dipping below $97 along the way.

Oil prices may stay under pressure given projections of a well-supplied market and bleak global demand.

The EIA cut its forecast for demand growth for this year to 890,000 bpd, a reduction of 70,000 bpd from last month's forecast, and pared its 2014 estimate by 120,000 bpd to 1.21 million bpd - a total of just over 2.1 million bpd demand growth over two years.

At the same time, the EIA sees supplies from countries outside the Organization of the Petroleum Exporting Countries (OPEC) growing by 1.11 million bpd in 2013 and by a further 1.77 million next year - combined growth of almost 2.9 million bpd over the same time period.

(Read More: China Exports Set to Underscore Worries Over US, Europe Demand)

An industry report showed U.S. crude inventories rose 680,000 barrels for the week to May 3, led by a nearly 1.2 million barrel build on the East Coast. That compares with a Reuters poll forecasting an increase on average of 1.9 million barrels.

Stockpiles at the Cushing, Oklahoma hub fell 646,000 barrels last week, according to the API.

Traders now await data from the EIA, due later in the day, to gauge the country's demand growth outlook.

Brent is expected to test support at $103.77, with a good chance of falling more to $102.43, while U.S. oil is biased to break support at $94.65 and fall towards $93.58, according to Reuters technical analyst Wang Tao.

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