Oil falls on EM worries; Brent ends January in the red

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Brent oil fell by $1 on Friday, putting it on track for its first monthly loss in four months, under pressure from worries over emerging economies turmoil and weak global stock markets.

U.S. crude also fell as traders took profits ahead of the weekend, although losses were stemmed by rising heating oil futures prices, which gained 1.5 percent on cold-weather demand. The spread between the two benchmarks fell below $9 for the first time in nearly 3 months.

Brent was headed for its first monthly fall since September under pressure from continued concerns over emerging markets that weighed on world stock markets. European stocks posted their first monthly loss since August on Friday and the U.S. stock market was on course for the same.

U.S. crude's discount to Brent was last trading at $9.14 after narrowing to $8.85, the smallest point since Nov. 8. Increases in supply also pressured Brent. OPEC's oil output rose in January from December's 2-1/2-year low, due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran, according to a Reuters survey.

Analysts said Friday's fall in U.S. crude was evidence that the Fed announcement and strengthening dollar finally caught up with crude prices that had been underpinned by cold weather driving up distillates demand.

Brent crude fell by more than $1 to under $107 a barrel, after ending 10 cents higher in the previous session. Trade was thin with a series of markets in Asia closed for the Lunar New Year holiday.

U.S. oil shed 74 cents, settling at $97.49. The spread between the two contracts held at the lowest settlement price since Nov. 7 at $8.50 per barrel.

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