Brent oil climbs above $58 as dollar weakens

By Himanshu Ojha

LONDON (Reuters) - Brent oil futures rose above $58 a barrel on Thursday as the dollar weakened and speculators covered their positions ahead of the April contract's expiry, while a build in U.S. crude stocks capped prices.

The dollar was down 0.4 percent against a basket of currencies, making dollar-traded commodities such as crude oil more attractive to holders of other currencies.

"A slightly weaker dollar is helping crude prices today," said Michael Hewson, chief markets analyst at CMC Markets.

"We've still got a significant supply glut. Overall I think the buyers are starting to shift a little bit lower."

Brent for April delivery was up 63 cents at $58.17 at 0910 GMT, after gaining $1.15 during the previous session in a rebound from a one-month low.

West Texas Intermediate climbed 33 cents to $48.50 a barrel, after closing the previous session down 12 cents.

The April contracts for Brent and WTI expire next week.

"When contracts expire there is more uncertainty and volatility associated with oil. For investors speculating, directionally WTI seems to be facing more pressure heading down. Brent will move upwards," said Victor Shum, vice president of IHS Energy in Singapore.

Brent's premium to U.S. crude widened to almost $10 a barrel, after dropping below $8 on Tuesday, its narrowest in a month.

Bearish sentiment towards WTI caused by the build in U.S. crude stocks helped to widen the spread, limiting the gains in WTI, said Yusuke Seta, a commodity sales manager at Tokyo's Newedge Japan.

U.S. crude inventories rose for the ninth straight week, gaining 4.5 million barrels last week to 448.9 million, U.S. Department of Energy data showed.

That was the highest level at this time of year in more than 80 years.

"Oil inventories are expected to increase further," Seta said.

Any price gains could be short-lived as oil stocks are forecast to rise further due to refinery maintenance, and the dollar could continue its recent strengthening against the euro, analysts said.

Potential supply disruptions, including escalating violence in Libya where Islamist militants kidnapped nine foreign oilfield workers on March 6, were the main bullish factors for Brent, Shum said.

(Additional reporting by Keith Wallis in Singapore; Editing by Dale Hudson)