By Ron Bousso
LONDON (Reuters) - Brent futures slipped below $110 a barrel on Tuesday but held near a six-week high as a pact to calm tensions in Ukraine faltered, while rising U.S. crude stockpiles weighed on prices.
A four-way peace deal signed last week in Geneva to reduce tensions in eastern Ukraine has had limited impact as pro-Russian separatists refuse to put down arms and pull out of occupied government buildings, while Kiev and Moscow accused each other of breaking the pact.
U.S. Vice President Joe Biden on Tuesday offered to back Ukraine's economy and urged it to achieve energy security.
Investors fear that an escalation in the crisis could lead to further western sanctions on Russia and disrupt oil supplies from the key producer.
Brent crude fell 35 cents to $109.60 a barrel by 0910 GMT, not far from a six-week high of $110.36 touched last week. U.S. crude slipped 45 cents to $103.92.
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"A lot of the Ukraine tension is priced in and will keep underpinning oil prices. We have been in a pretty broad (price) range and we are near the top of the range so unless things change significantly we will drift lower," said London-based CMC Markets analyst Michael Hewson.
Investors across the board see the unfolding crisis in Ukraine as a threat to risk appetite and said financial markets remain vulnerable to more shocks.
OUTLOOK
Oil market participants await the latest inventory data from the United States to gauge the demand outlook at the world's biggest consumer.
U.S. commercial crude inventories were forecast to have risen last week, while gasoline stockpiles fell, a Reuters poll showed. Taken ahead of weekly inventory reports from industry group the American Petroleum Institute (API) and from the U.S. Department of Energy's Energy Information Administration (EIA), the survey estimated crude stocks rose 2.7 million barrels on average for the week ended April 18.
Oil investors are also watching the progress of talks between Iran and world powers to end Tehran's disputed nuclear programme. President Hassan Rouhani's government confirmed speculation on Monday it had reshuffled the leadership of Iran's atomic agency to sideline nuclear experts opposed to talks on its atomic programme with the West.
China's March crude oil imports from Iran rose more than a third from a year ago, keeping imports in the first three months of 2014 close to the levels seen before Western sanctions were applied more than two years ago.
(Additional reporting by Manash Goswami; editing by Muralikumar Anantharaman and Keiron Henderson)