Brent Gains on Falling Stockpiles and South Korean Incentives

Brent crude oil improved Wednesday on falling stockpiles and increasing demand prospects. The commodity neared $104 and traded at $103.60 at 10:06 GMT on Wednesday morning. According to

, the American Petroleum institute released a report that showed US crude stockpiles had dropped by 7.8 million barrels. The data surprised markets, where just a 400,000 barrel decline was originally forecast. With the US in peak driving season, most are hopeful that demand will increase in the number one oil consuming nation. Later on Wednesday, markets will be waiting for oil inventory reports from the Energy Information Administration which will help investors gauge the US' demand outlook. US payrolls data is also set to be released later on Wednesday, and investors will be looking to the figures for any clues about the jobless claims report due on Friday. The dollar has been a major driver of commodity prices recently as investors try to work out when the US Federal Reserve will ease up on its stimulus program. Most analysts are expecting oil prices to remain choppy in the near term as investors look to economic indicators from the US to determine if the Fed's $85 billion per month quantitative easing program will continue or not. In a move to cut its reliance on Middle Eastern oil supplies, South Korea is aiming to create new incentives which would encourage refiners to import crude from other parts of the world. The effort to diversify its suppliers lifted Brent prices as many see the change increasing demand.