[LONDON] Brent oil prices firmed on Wednesday as business morale in the eurozone's top two economies improved, offsetting concerns of oversupply that has filled fuel storage tanks around the world.
Germany, Europe's largest economy, saw business morale rise for the fifth month in a row in March, hitting its highest since July 2014, Ifo's business climate index showed.
Business morale also rose in France to its highest for nearly three years.
Brent crude oil was up 32 cents at US$55.43 a barrel by 1029 GMT. US light crude oil was down 4 cents at US$47.47 per barrel.
US crude oil inventories rose by 4.8 million barrels in the week to March 20, data from the American Petroleum Institute (API) showed on Tuesday, pushing total US crude oil stockpiles to record highs above 450 million barrels.
Chinese crude oil stocks are also at historic highs and the country's commercial and strategic storage is almost full, a Sinopec trading executive told an industry forum on Wednesday.
With storage approaching its limit, China's oil imports will likely stay flat or rise only slightly this year, the official said.
Analysts from the International Energy Agency and the Organization of the Petroleum Exporting Countries estimate that world oil demand is now running at more than 1.5 million barrels per day below supply on average and say the market is unlikely to balance until the second half of this year.
That means several more months of rising inventory levels and the risk of more pressure on oil prices.
China has been taking advantage of cheap oil to build up its strategic petroleum reserves (SPRs), helping push its imports to record highs late last year despite an economy growing at its slowest pace in 25 years, but that process is now ending.
"Although the market should already have expected that the demand from China's SPR would not last forever, it (was) hard to predict when this time would come," said Daniel Ang, investment analyst at oil brokerage Phillip Futures.
US oil prices have been squeezed as crude stocks continue to rise to record highs.
Investors awaited US oil inventory data from the Energy Information Administration (EIA) due later on Wednesday to see whether it confirmed the API report.
A Reuters poll of eight analysts forecast the EIA report would show a crude stock build of 5.1 million barrels on average last week.