* Spike in U.S. service sector growth offers relief from
* Pro-Russian rebels shoot down a Ukrainian helicopter;
violence moved west
* U.S. crude stocks forecast to rise 1.5 million barrels
* Coming up: U.S. API inventory report due 2030 GMT
By Jacob Gronholt-Pedersen
SINGAPORE, May 6 Brent crude held steady below
$108 per barrel on Tuesday as clashes across Ukraine added to
geopolitical risk supporting a market that might otherwise sag
due to expectations weekly data will show higher inventories in
the United States.
Data released overnight showing a spike in U.S. service
sector growth could offset some of the pessimism generated by
disappointing Chinese manufacturing data.
Brent crude for June delivery was 3 cents lower at
$107.69 per barrel by 0336 GMT, after settling 87 cents down.
U.S. oil was also 3 cents lower at $99.45, following a fall of
28 cents on Monday.
"The services data adds more evidence that the U.S. economy
is indeed recovering, helping lift the prospect for crude oil
demand in the United States," said Chee Tat Tan, an investment
analyst at Phillip Futures in Singapore.
In Ukraine, pro-Russian rebels shot down a Ukrainian
helicopter in fierce fighting near the eastern town of
Slaviansk, while Kiev drafted police special forces to the port
city of Odessa to stop the rebellion spreading westward.
In one of the first signs that the conflict has impacted
Russian energy shipments, Russia's state pipeline operator
stopped diesel shipments to Ukraine and Hungary last month due
to uncertainties over the pipe's ownership.
RISING U.S. STOCKS
Oil prices remain subdued by plentiful supplies, with U.S.
commercial crude oil inventories forecast to have hit a new
record high for the third week in a row due to higher imports.
The American Petroleum Institute (API), an industry group,
is due to issue its weekly inventory report at 2030 GMT, while
the U.S. Department of Energy's Energy Information
Administration (EIA) will issue it report on Wednesday.
A preliminary Reuters poll of five analysts, taken ahead of
reports, showed expectations centering round a rise of 1.5
million barrels in crude oil stocks for the week ended May 2.
EIA data wiped 2 percent off U.S. oil futures last week by
showing U.S. crude stocks hit a record high on the week ending
on April 25, led by another steep increase on the Gulf Coast.
"The concern is that the market cannot keep up with the pace
of production," said Chee Tat Tan.
Higher Libyan exports have also put pressure on oil prices
in recent weeks. The country's oil production currently stands
at 250,000 barrels a day, but the vital southern El Sharara
oilfield remains closed, a spokesman for state-run National Oil
Corp (NOC) said on Monday.
A new protest has shut down the Zultun and Raquba oilfields
in central eastern Libya, halting their combined output of
39,000 bpd, the spokesman said.
(Reporting By Jacob Gronholt-Pedersen; Editing by Simon