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UPDATE 8-Brent spread hits 8-month high, market eyes Iran

Jeanine Prezioso
Friday, 22 Nov 2013 | 4:11 PM ET

* Investors focus on Iran talks, deal appears closer

* China's oil demand expected to rise next year

* High U.S. oil supplies continue to weigh on prices

(Recasts to lead with Brent/WTI spread, adds analyst's quote, updates prices to settlement)

NEW YORK, Nov 22 (Reuters) - Brent crude rose by nearly $1 on Friday in heavy spread trading that saw the international benchmark's premium to U.S. oil hit an eight-month high.

The spread widened by nearly $1.60, leaving Brent $16.21 over U.S. West Texas Intermediate (WTI) crude at the settle, the widest level since March.

Uncertainty over a deal between Iran and Western nations about Iran's nuclear program supported Brent in early trade, although a resolution seemed closer toward the end of the session. U.S. Secretary of State John Kerry will leave for Geneva on Friday to join the discussions and diplomats said a major sticking point may have been overcome.

Sanctions on oil-rich Iran have kept around 1 million bpd of oil from the global market and any deal could allow some of that oil to be sold, depressing a market that is already well supplied.

U.S. Senate Majority Leader Harry Reid said on Thursday he was committed to moving ahead with tougher sanctions against Iran, adding to uncertainty among some traders who had been betting on a drop in prices.

The market was also eyeing forecasts from top Asian refinery Sinopec that oil demand in No. 2 consumer China would rise by an average of 3.8 percent a year in 2014 and 2015.

Brent for January delivery ended 97 cents higher at $111.05 after trading to a six-week high of $111.40. The contract gained for a second week as supply outages in Libya and rising oil demand in China supported prices.

U.S. crude settled 60 cents lower at $94.84 a barrel. It posted its biggest daily percentage gain in two months on Thursday and ended the week 1.06 percent higher, snapping six weeks of declines. Rising U.S. crude inventories, especially around the Cushing, Oklahoma, delivery point for the U.S. contract, have weighed on the domestic contract.

"When you step back from WTI prices, you'll see we are consolidating at these levels and waiting for the next driver," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.

U.S. RBOB gasoline futures settled down nearly 1 percent at $2.7261 a gallon, after news of refinery outages pushed the contract up by 3 percent in the previous session.

(Additional reporting by Joshua Franklin and Lin Noueihed in London and Jacob Gronholt-Pedersen in Singapore; Editing by Andrew Hay and Krista Hughes)