Oil rose on Tuesday, supported by concerns that flooding could hit the US Gulf Coast refining hub and data showing strong Chinese crude imports for April.
While no refineries had been forced to cut operations yet, rising waters along the Mississippi threatened to disrupt plants in Louisiana, including the second largest US refinery, in the next two weeks.
Gasoline futures led oil market gains, with the flood threat adding to concerns about 11 straight weeks of inventory declines as the United States gears up for the peak summer holiday period.
US gasoline inventories fell 1.8 million barrels last week, the industry group American Petroleum Institute said in a report released late on Tuesday, much more than the 200,000-barrel dip analysts polled by Reuters had expected.
But crude stockpiles rose 2.9 million barrels, the API said, more than double expectations, and distillate stocks rose 582,000 barrels, in line with estimates.
The US Energy Information Administration's inventory report follows on Wednesday morning.
Brent crude for June delivery rose USD 1.73 to settle at USD 117.63 a barrel. US June crude settled up USD 1.33 at USD 103.88 a barrel as US gasoline futures jumped 3%.
Crude oil trade volumes, which surged last week as prices tumbled USD 16 a barrel, remained strong with Brent volumes 60% over the 30-day moving average and US crude 15% above that average, according to Reuters data.
Trading volume has been high as traders remain cautious and watch every market turn after last week's sell-off and the 6% rebound on Monday, analysts said.
"Crude futures are stronger today as the flooding in Mississippi River has raised worries about refinery operations in that region," said Mark Waggoner, president of Excel Futures in Bend, Oregon.
"The other bullish influence today is the strong trade data from China, which seems to have overcome, at least for the moment, concerns about any slowdown in its economy."
CHINA, MARGINS
Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24 million barrels of crude oil per day (bpd), up 1.7 percent on the year, official customs data showed on Tuesday.
Oil product imports in the No. 2 oil consumer fell by 17% drop, however, as smaller refineries cut runs to cope with high oil prices, diminishing demand for feed stocks.
News that the CME Group Inc raised margins on US crude oil futures for a fourth time since February in an effort to tackle rising volatility weighed on prices in early trade.
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank.
