China inflation data, Iran lift oil prices

A subdued inflation report from China, Iran nuclear plans and a weaker dollar helped to lift oil prices. (AFP/Andreas Solaro)

New York's main contract, West Texas Intermediate (WTI) for May, closed at $94.20 a barrel, a gain of 84 cents from Monday.

Brent North Sea crude for delivery in May jumped $1.57 to settle at $106.23 a barrel in London trade.

WTI prices rose "after China reported inflation eased more than people expected," said Bart Melek of TD Securities.

The Chinese government said the country's consumer price index rose 2.1 per cent in in March, well below the 10-month-high of 3.2 per cent in February and below the 2.4 per cent CPI reading forecast by analysts.

The slowdown in inflation eased investor concerns that Beijing would want to tighten monetary policy if inflation were heating up.

Traders also digested Iran's announcement of a new uranium production facility and two extraction mines only days after talks with world powers on its disputed nuclear program again ended in deadlock.

"Prices were buoyed by news that Iran was launching two new nuclear programs," said James Williams of WTRG Economics.

Robert Yawger of Mizuho Securities USA said the dollar's weakness and anticipation of the US oil inventories report had supported the market.

A softer greenback makes dollar-priced oil more attractive to buyers using stronger currencies.

On Wednesday, the US Department of Energy's weekly petroleum stockpiles report was expected to show another increase in crude oil supplies, to their highest level in 22 years, said Matt Smith of Schneider Electric.

According to analysts polled by Dow Jones Newswires, the DoE will report an increase of 1.2 million barrels of crude oil in the week ending April 5.

Gasoline stockpiles in the world's largest economy were estimated to have fallen by 1.5 million barrels, and distillates, including diesel and heating fuel, were projected to fall by 900,000 barrels.