* U.S. crude inventories up, gasoline down -EIA
* U.S. economy stumbles in first quarter, but prospects
* Ukraine separatists down army helicopter, 14 killed
* Brent poised to gain 2 percent in May, U.S. oil to rise
By Manash Goswami
SINGAPORE, May 30 Brent futures held above $110
a barrel on Friday as a steep drawdown in U.S. gasoline
stockpiles revived hopes of steady demand growth in the world's
top oil consumer, with geopolitical tensions over Ukraine
providing additional support.
U.S. gasoline stocks fell 1.8 million barrels,
data from the Energy Information Administration showed, compared
with expectations of a 300,000-barrel gain, indicating a strong
start to the summer driving season.
Investors still caution that oil may be prone to a
correction following gains in the last few weeks on supply
Brent crude gained 7 cents to $110.04 a barrel by
0252 GMT, and is set to rise nearly 2 percent for the month.
U.S. oil slipped 21 cents to $103.37, partly under
pressure from an overall rise in U.S. crude stocks and gains
overnight. It is set to rise nearly 4 percent this month.
"Better gasoline demand bodes well for the U.S. economy,"
said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
"Overall, I see oil supported by geopolitical tensions and an
improving demand outlook."
Total U.S. crude inventories rose 1.7 million
barrels in the last week, compared with analysts' expectations
for an increase of 500,000 barrels. But crude stocks at the
Cushing, Oklahoma, delivery hub fell 1.53 million
barrels, EIA said.
Oil and the broader financial market ignored U.S. data that
showed the world's biggest economy contracted for the first time
in three years in the first quarter and focused on signs of a
rebound in the second quarter.
In Ukraine, investors worry that any worsening in the crisis
will further escalate tensions between Russia, the world's
second-largest oil exporter, and the West.
Pro-Russian separatists shot down a Ukrainian army
helicopter on Thursday, killing 14 soldiers including a general,
as government forces pressed ahead with an offensive to crush
rebellions in the east swiftly following the election of a new
Concerns of continued disruption to north African exporter
Libya were countered by expectations of rising Middle East
Iran's crude oil exports increased in May after a decline in
April, according to sources who track tanker movements. Iran's
exports have averaged 1.38 million barrels per day (bpd) in May,
one of the sources said. That represents an increase from 1.1
million bpd in April, as estimated by the Paris-based
International Energy Agency.
Brent is expected to break support at $109.41 and fall
further to $108.43, while U.S. oil is expected to retest support
at $102.67, according to Reuters technical analyst Wang Tao.
(Reporting by Manash Goswami; Editing by Richard Pullin)