Brent crude oil steadied around $110 a barrel on Tuesday, supported by tight supply and hopes of demand growth from the world’s top oil consumers, the United States and China.

Oil exports from Libya have dropped to a trickle in recent months, removing as much as 1.4 million barrels per day (bpd) of high-quality, light crude from the oil market and underpinning prices for other grades such as North Sea oil.

Western sanctions on Iran and turmoil in several other oil producers have also reduced supply, pushing oil prices towards the top of recent ranges.

At the same time, oil demand appears to be picking up again after a long period of below-par global economic growth.

Brent rose almost 1.3 percent on Monday, its biggest daily percentage advance in nearly two months, and consolidated on Tuesday, holding on to most of its recent gains.

Brent was up 20 cents at $110.19 a barrel by 7:30 a.m. ET.

U.S. oil rose 35 cents to $104.76 a barrel. It ended up 1.7 percent on Monday, its biggest daily gain since April.

China’s central bank cut the level of reserves that banks with sizeable loans to the farming sector and other companies must hold, helping support the economy.

“We are at a critical little juncture for oil markets, with both benchmarks trying to push above key trendline resistance. People are getting confident about the global demand outlook,” said Ric Spooner, chief market analyst at CMC Markets.

Oil also drew support from expectations of a drop in U.S. crude inventories, signaling healthy consumption as the summer driving season gets under way.

The expected decline in U.S. crude stockpiles of 1.5 million barrels, according to a Reuters poll, follows data showing employment returned to its pre-recession peak, the latest in a string of positive U.S. indicators.

“The on-market payroll print reinforced U.S. economic stability and the demand backdrop for the world’s largest oil consumer,” analysts at ANZ said in a note. “Stronger seasonal demand should boost oil prices further, as inventories tighten.”

The oil market kept an eye on producer group the Organization of the Petroleum Exporting Countries (OPEC), which meets in Vienna on Wednesday to decide oil output targets.

The cartel, which pumps a third of the world’s oil, has said it is happy with global oil prices and is expected to maintain its production target at 30 million bpd.

United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said on Tuesday oil prices are at a suitable level for OPEC members and the group sees no shortage in supply: “Oil prices have been steady over the past period and at a comfortable level for all members.”

Libya’s Oil Minister Omar Shakmak agreed, saying an oil price close to $110 a barrel was good for the oil market: “This is positive for the market, it’s for the benefit of producers and customers alike.”

http://www.reuters.com/article/2014/06/10/us-markets-oil-idUSKBN0EL19J20140610