* Significant progress at Geneva talks on Ukraine seen slim
* US oil gains despite big rise in crude stocks
By Manolo Serapio Jr
SINGAPORE, April 17 (Reuters) - Brent oil steadied above $109 a barrel on Thursday, trading not far from a six-week high, as rising tensions in Ukraine kept the geopolitical risk premium on crude prices intact, while an upbeat view on U.S. and Chinese demand was also supportive.
With Russian troops massed on the border with Ukraine, prospects of defusing the crisis at talks in Geneva later in the day among foreign ministers from Russia, Ukraine and the United States together with the European Union’s foreign policy chief appear slim.
“There’s still risk premium built into oil prices from Ukraine, also coupled with expectations that demand out of the U.S. and China largely looks positive in light of recent economic data,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.
China’s economy grew 7.4 percent in the first quarter, the lowest in six quarters but ahead of market expectations for an increase of 7.3 percent. The data, released on Wednesday, was a relief for investors anticipating the worst in the world’s No. 2 economy and oil consumer, helping fuel gains in risky assets.
Brent crude for June delivery was off 7 cents at $109.53 a barrel by 0330 GMT, mostly clinging onto gains made on Wednesday, when it peaked at $110.36, the highest since March 4.
U.S. oil for delivery in May rose 27 cents to $104.03 per barrel. The contract also touched a six-week high of $104.99 in the previous session.
U.S. industrial production rose at a faster-than-expected clip in March, the latest sign the top economy was gaining momentum.
The softer dollar was also backing gains in West Texas Intermediate crude after Federal Reserve Chair Janet Yellen stressed the need for accommodative policy, citing persistently low inflation and economic slack.
The U.S. central bank has kept its key rate near zero since the depths of the financial crisis in late 2008, and has bought more than $3 trillion in assets to help depress borrowing costs and stimulate economic growth amid a slow recovery.
“Yellen’s comments in terms of keeping interest rates at ultra low levels for quite some time should feed through to fundamentally stronger demand for oil,” said Le Brun.
U.S. oil prices rose despite a sharp spike in crude stockpiles in the world’s biggest consumer last week.
Crude oil stocks rose 10 million barrels to 394 million barrels in the week ending April 11, according to the Energy Information Administration (EIA), far more than the 2.3 million-barrel build expected by analysts.
Inventories were boosted in part by a 5.2 million-barrel build on the Gulf Coast, to the highest level since the EIA began collecting data in 1990.
“Despite the inventory build and the fact that there’s a lot of supply out there, prices remain strong and continue to go up due to the rising geopolitical tensions in Ukraine,” said Victor Shum, vice-president of energy consultancy IHS Energy Insight (Reporting by Manolo Serapio Jr.; Additional reporting by Florence Tan and Ed Davies)