US oil loses ground to settle near $105
U.S. crude oil futures fell sharply on Tuesday as traders sold to close out positions ahead of the front-month contract's expiration and in reaction to news the Seaway pipeline had shut down halting shipments from Oklahoma to the Gulf Coast.
Seaway carries crude oil from Cushing, Oklahoma, the delivery point for the futures' benchmark West Texas Intermediate (WTI) crude, to refineries on the Gulf Coast.
The drop in U.S. crude oil swelled its discount to Brent to its largest since June.
U.S. crude oil futures for September delivery, expired $2.14 per barrel lower, or down 2 percent, at $104.96, their largest one-day percentage loss in two months.
October U.S. oil futures ended the session $1.75 per barrel lower at $105.11. The spread between October and November futures prices narrowed to its smallest point in two months at 51 cents.
Brent's premium to WTI oil futures, or the Brent-WTI spread, passed through its 50-day moving average for the first time in five months. It settled at $5.04 per barrel, the widest since the end of June, helped by Brent's higher close.
"We have a huge amount of net length and this is just rolling contracts and profit taking," said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
"We've got a lot of data coming out tomorrow. Whether or not it's a downward trend we'll have to wait until tomorrow to see."
In the meantime, Brent crude oil futures rose on continued concerns about potential supply disruptions in the Middle East, reversing losses caused by worries about the U.S. Federal Reserve's monetary easing policy.
"We were down early on tapering concerns, and what seemed to turn the momentum around were concerns about clashes in Libya," said Phil Flynn, an analyst with Price Futures Group in Chicago.
Brent crude oil futures for October delivery settled 25 cents higher at $110.15 per barrel, after trading as low as $108.61 earlier in the session.
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