UPDATE 7-Oil edges down in volatile spread trading
* Brent, U.S. crude both retreat over $1 from earlier highs
* U.S. crude climbs within 6 cents of Brent
(Updates prices, changes byline, dateline pvs LONDON)
NEW YORK, July 19 (Reuters) - Oil prices slipped on both sides of the Atlantic on Friday, reversing earlier gains in choppy trading as traders booked profits ahead of the weekend and as some of the length in the market trickled out.
The losses followed three-week-long rallies in which both benchmarks topped $109 a barrel and hedge funds and speculators piled into their most bullish position since the Libyan civil war.
"Traders who bought the breakout at $108 don't want to get too piggish, so you've got some profit-taking and you've got some shorts trying to get into the market," said Richard Ilczyszyn, chief market strategist at iitrader.com.
Brent for September fell 71 cents to $107.99 a barrel by 12:03 p.m. EDT (1603 GMT), after hitting $109.18 earlier in the session.
August U.S. crude, commonly called West Texas Intermediate or WTI, hit a 16-month high of $109.32 earlier in the day before falling to $108.04.
U.S. oil for September was down 29 cents at $107.52 a barrel.
The convergence between the two front-month crude benchmarks, which shrank Brent's premium to WTI <CL-LCO1=R> to 6 cents in earlier trade, comes as increased pipeline capacity has drained a glut of oil at the WTI delivery point of Cushing, Oklahoma to the U.S. Gulf Coast where refinery demand has been high. Stocks at Cushing have fallen to 46 million barrels from 52 million in January.
The measure of the relative strength of U.S. crude oil futures has maintained technically "overbought" status for the longest stretch in four years.
The relative strength index, or RSI, has been above 70 since July 5. Technical analysts regard that level as a sign a commodity has been overbought and ready for a fall, while an RSI of 30 indicates prices may be too low and set to rebound.
U.S. gasoline also pared its gains on Friday to a 0.5 percent rise, after an earlier rise of 1.5 percent.
(Additional reporting by Peg Mackey in London, Manash Goswami in Singapore; Editing by Marguerita Choy)