Brent crude oil held steady above $112 a barrel on Wednesday, as investors awaited inventory data from the United States for clues on the demand outlook of the world's largest oil consumer.
Brent crude rose 9 cents at $112.50 a barrel. U.S. crude for March dropped 13 cents at $96.55, off a four-month high of $96.90 hit earlier.
In the United States, West Texas Intermediate (WTI) crude futures rose this month, narrowing their spread with Brent to less than $16, after the expanded Seaway oil pipeline started operations and eased a glut in the Midwest region.
Morgan Stanley analysts said they expect the Brent-WTI spread to stay between $10 and $20 a barrel at least in the first half of 2013 as the pipeline expansion will not be enough to clear the bottleneck at Cushing, Oklahoma, the delivery point for WTI contracts.
The American Petroleum Institute will release weekly U.S. oil inventory data later on Wednesday, delayed a day by a holiday. Data from the U.S. Energy Information Administration will be released on Thursday.
The data is expected to show builds in U.S. crude, gasoline and distillate inventories, according to a Reuters poll of analysts.
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—Reuters
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