Brent Bobs and Weaves, but Settles Above $104
Oil prices edged higher on Monday, lifted by gains in gasoline futures and strong selling of the spread between Brent crude and U.S. crude.
Brent's premium to U.S. West Texas Intermediate futures settled at $11.30 a barrel, after narrowing to just over $11 in afternoon trade, the lowest level since June.
The move extended a trend that has knocked $12 off the key spread since February on expectations that new pipeline capacity to move crude from the Cushing, Oklahoma hub for the U.S. contract would alleviate a glut there that has kept U.S. crude prices relatively weak.
Analysts said the sharp sell off in the spread seen over the past two sessions, from over $13 a barrel last Thursday, could be short-lived, however, and that it may be poised for a rebound.
"(The spread) probably starts to widen out at this point. Just off the technicals, the spread is overdone," said Bill Baruch, senior market strategist at iitrader.com in Chicago.
Outright prices were choppy, with Brent crude futures settling up 54 cents at $104.66 a barrel, after reaching a session high of $105.55. Brent hit an eight-month low of $103.62 per barrel on Friday after disappointing U.S. jobs data, and traders said the down trend could resume again once the market had consolidated.
U.S. light, sweet crude settled up 66 cents at $93.36, peaking at $93.75 early Monday following the 4.6 percent week-on-week slide registered on Friday.
U.S. RBOB futures led the oil complex higher, settling up nearly 4.57 cents at $2.9093, with traders citing the approaching U.S. summer gasoline season as a possible support.
Fears remain about the potential for global? supply disruption because of the dispute over Iran's nuclear program, after weekend talks with western powers ended without a resolution.
U.S. Secretary of State John Kerry said on Sunday world powers would pursue further talks with Iran, but stressed that the process could not go on forever.
Another potential supply disruption, however, was averted by last-minute wage agreement deal in Norway, avoiding a threatened strike that could have disrupted the country's oil and gas industry.
"Crude oil got a bounce after last week's drop, and from the lack of a deal or any progress with Iran in the talks about its nuclear program, but the dollar's strength may limit the rise," said Phil Flynn, analyst at Price Futures Group in Chicago.
Early support for crude oil prices also came from "nervousness about Korea," Flynn noted, where tensions on the peninsula have ratcheted up in recent days after provocative words from North Korean leader Kim Jong Un.