Brent crude futures traded both sides of unchanged on Tuesday, while U.S. crude pushed higher on supportive economic data, paring Brent's premium to its U.S. counterpart to the smallest in more than eight months.
Brent's premium over the U.S. light sweet crude contract hovered at less than $13 a barrel, having slumped from its recent peak of $23.45 in February.
The spread narrowed to $12.52 during Tuesday's trading, the smallest premium for Brent since early July.
Brent crude rose 31 cents in choppy U.S. trading, changing hands around $108.48. U.S. May crude was up 54 cents at $95.35 a barrel, having reached $95.88, the highest for front-month futures since Feb. 20.
Trading was choppy reacting to mixed U.S. economic data, with prices lifted after the S&P/Case Shiller survey showed single-family home prices rose in January, posting the biggest annual increase in 6-1/2 years.
A report that U.S. durable goods orders jumped in February also supported, but oil and equities prices were tempered by a government report showing single-family home sales fell in February and by a Conference Board report showing consumer confidence slumped in March.
"Solid housing data showing rising home prices pointed to a U.S. economy that continues to rebound, helping boost U.S. crude," said John Kilduff, partner at Again Capital LLC in New York.
"But the consumer confidence and weaker home sales numbers caused a bit of a pull back," Kilduff added.
Adding to the jumbled snapshot of economic factors was a report from the Federal Reserve Bank of Richmond showing manufacturing activity was less robust in March versus the previous month.
Brent crude prices continued to be hemmed in by investor caution as Europe attempts to deal with the financial problems in Cyprus, where banks remain closed until Thursday.
"The economic position in the U.S. looks better than in Europe," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
Recently improved North Sea production also has weighed on Brent prices, while a production boom in the United States and an enhanced ability to relieve the glut of crude oil in the Midwest have been factors reducing Brent's price premium to U.S. crude.
"The erosion (of the premium) is because U.S. shale production is decreasing imports of light sweet crude grades," said Seth Kleinman, head of energy research at Citigroup.
Kleinman said the spread could narrow to $10 per barrel but was unlikely to shrink much further because of difficulties in getting U.S. oil supplies to refiners on the U.S. East Coast and Gulf Coast.
This week's snapshots of U.S. commercial oil stockpiles are expected to show crude stocks increased last week, according to a preliminary Reuters survey of analysts on Monday.
Refined products stockpiles are expected to have fallen.
Data from industry group American Petroleum Institute is due on Tuesday at 4:30 p.m. EDT (2030 GMT), followed by the government's report from the Energy Information Administration (EIA) set for release at 10:30 a.m. EDT (1430 GMT) on Wednesday.