UPDATE 7-Brent oil slips, spread narrows on profit taking

Jeanine Prezioso
Thursday, 31 Oct 2013 | 12:36 PM ET

* Brent-WTI spread widens, touches biggest in 6 months

* Libya hikes pay for oil sector workers

* Market anticipates return of U.S. refining capacity

(New throughout, updates prices and market activity, new byline, changes dateline, previous LONDON)

NEW YORK, Oct 31 (Reuters) - Brent crude futures slid by more than $1 on Thursday, reversing the previous session's gains, as traders took profit and turned their focus to the end of the U.S. refinery maintenance season, expected to boost demand for U.S. crude.

Traders sold Brent after the spread between the international benchmark's premium and the U.S. oil benchmark West Texas Intermediate (WTI) widened to the most in six months at $13.60 per barrel. Brent's premium over WTI has risen $4.50 in five sessions.

"We jumped up $5 in a week," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut, "People are looking to scrape some money up."

Brent was set to end October nearly flat as disruptions to oil shipments from major producer Libya kept supply tight.

Brent crude for December delivery was down $1.15 at $108.71 a barrel by 12:18 p.m. EDT (1618 GMT). Brent was on track to finish flat for the month of October.

U.S. crude was down 62 cents at $96.15, on course for a 6 percent monthly decline in October, its biggest such drop in a year, as stockpiles have increased in the world's top oil consumer.

U.S. oil rose to a session high of $97.03 earlier in the session. WTI's discount to Brent <CL-LCO1=R> narrowed to $12.58 by early afternoon.


Libya's government has ordered a 67 percent increase in pay for employees of the state oil sector, where three months of strikes and unrest have reduced the country's crude oil exports to a trickle.

Strikes and protests by militias and minorities demanding more political rights or better pay have shut much of the OPEC member's oil output.


Oil stocks rose for a third week at Cushing, Oklahoma, delivery point for U.S. oil futures, U.S. government data showed. The data, released on Wednesday along with figures showing the largest six-week increase in overall U.S. inventories since April 2012, pressured U.S. crude prices which helped boost the premium for Brent.

Refiners should soon start absorbing some of that excess supply. Some 700,000 barrels per day of refinery capacity is expected back online by mid-November, IIR Energy data showed, which will absorb stockpiles of crude as refinery runs increase.

"We're looking for demand to ramp up to clear that inventory," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

Oil producers are expected to begin filling the southern leg of TransCanada's Keystone pipeline next month, which will also drain supplies from Cushing.

(Additional reporting by Simon Falush in London and Manolo Serapio Jr. in Singapore; editing by Jane Baird, Keiron Henderson and David Gregorio)