By Jacob Gronholt-Pedersen SINGAPORE (Reuters) - Brent crude held steady below $105 a barrel on Thursday, as a decline in U.S. oil inventories was balanced by a glut in global markets.
Crude inventories in the United States fell slightly more last week than analysts had expected, while exports of crude oil from U.S. shores jumped in June to the highest since the 1950s, the Energy Information Administration (EIA) said.
NATO said Russia had massed large amounts of troops on Ukraine's border and could use the pretext of a humanitarian mission to invade.
"We are seeing a bit of disinterest on the crude side with respect to the Ukrainian conflict," said Mark Keenan, head of commodities research in Asia at Societe Generale, pointing to a muted response to the escalating conflict in Ukraine.
"Sanctions against Russia is not really impacting oil, but more the machinery and financing that Russia needs to grow supply from shale and deep water," said Keenan.
"If that starts getting hampered, then long-term production will be affected, which is causing the back-end of the curve to increase," he said, pointing to a disconnect in prices for oil futures contracts due for delivery 1.5-2 years from now.
Brent crude for September delivery was 4 cents lower at $104.55 (62.04 pounds) a barrel by 08:12 AM BST, after settling 2 cents lower.
U.S. crude traded five cents lower at $96.87 a barrel. The contract dropped to as low as $96.69 on Wednesday, its weakest since early February.
Crude stocks at Cushing, Oklahoma - the delivery hub for the U.S. crude contract - rose by 83,000 barrels in the week to Aug. 1, EIA said.
Total crude inventories fell 1.8 million barrels, much less than the 5.5-million barrel decline reported earlier by industry group American Petroleum Institute, while lower refinery output contributed to a surprise sharp drop in gasoline and distillate inventories, the data showed. <EIA/S>
A further sign of ample supply on global crude markets and underscoring a dramatic shift in global flows caused by the U.S. shale oil boom, EIA said exports of crude oil jumped in June to the highest since the 1950s, topping OPEC member Ecuador in supplying global markets.
Still, the potential for U.S. crude output is underestimated, according to the head of Pioneer Natural Resources (N:PXD), the largest operator in the Permian Basin, who said production could hit up to 14 million barrels per day in a few years.
FRUIT AND VEGETABLES
In its starkest warning yet that Moscow could mount a ground assault on its neighbour Ukraine, NATO said Russia had massed around 20,000 combat-ready troops on Ukraine's border.
As rebels have lost ground to Ukrainian government troops, Russia announced military exercises this week near the border.
In retaliation against Western sanctions over its support for rebels in Ukraine, Russia said it will ban all imports of food from the United States and all fruit and vegetables from Europe.
In a sign that China's sputtering economy takes its taking a toll on key industrial sectors, diesel demand in the world's second largest oil consumer is set to post its first fall in more than a decade this year, sources at the country's top oil majors said.
A glut of crude in the Atlantic basin and in Asia has pushed futures prices for prompt delivery below those of delivery in later months - a market structure known as contango.
"For the Brent contango to endure, geopolitical tension must remain muted while the surplus in light oil supply in the Atlantic Basin must persist," analysts at BNP Paribas said in a note.
"This may not necessarily be the case in the coming months," they said, pointing to recent fighting in Libya and Iraq.
(Reporting By Jacob Gronholt-Pedersen; Editing by Michael Perry and Anupama Dwivedi)