The news presaged further drawdowns in overall U.S. crude oil
inventories for a second straight week. A Reuters poll estimated the
drawdown at 3 million barrels in the week to Dec. 6 following the
previous week's drain of 5.6 million barrels.
Brent traded largely flat on Tuesday after losing nearly $1 on
reports of a possible end to the months-long blockade of east Libyan
The prospects of increased supply of Brent and less landlocked U.S.
crude helped narrow the spread between the two to a month low of
$10.48 per barrel earlier in the session.
"The Brent-WTI spread has gone from below $10 to above $19 and now
around $10 in the last five weeks, and now maybe we'll get Libyan
production back in excess of one million barrels," said Gene
McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
"Now I think it's going to come down to what kind of inventory
report we see."
Brent for January fell 1 cent to settle at $109.38 a barrel, after
swinging between $108.55 and $110.45 during the session. Brent
dropped 2 percent on Monday, its biggest loss in five weeks.
U.S. light crude futures for January gained $1.17 to finish at
$98.51 after hitting a six-week high of $98.74 earlier in the
Brent's premium to U.S. crude <CL-LCO1=R> stood at $11.18.
Leaders of a movement seeking autonomy for Libya's eastern Cyrenaica
region said on Tuesday they could allow oil exports to resume on
Dec. 15 from several ports if Tripoli meets their demands and allows
the region to take its share of crude. Movement leaders said the
group is set to begin trying to sell oil on its own if the
government does not meet its demands.
However, Libya's oil workers union threatened on Tuesday to close
its eastern ports again if regional separatists decide to reopen
them on Dec. 15.
The disruption has restricted Libyan oil output to 250,000 barrels
per day, down from 1.4 million bpd in July, and supported the price
U.S. crude oil, or West Texas Intermediate (WTI), rose over $1
earlier in the session on news that TransCanada Corp began filling a
700,000 bpd pipeline that will transport crude from Cushing to Gulf
Coast refiners. The company did not say when it expects the line to
begin commercial service but a filing with the U.S. Federal Energy
Regulatory Commission last week said it expects the pipeline to be
in service by Jan. 3.
[to top of second column]
A short-term energy outlook report from the U.S. Energy Information
Administration revised up estimates for global oil demand and U.S.
gasoline demand, giving both crude oil benchmarks a boost shortly
after noon EST. The report raised the forecast increase for world
oil demand to 1.15 million barrel per day year-on-year in 2014.
"There were some surprises in there, and it gave the market
something to latch onto," said Phil Flynn, an energy analyst at the
Price Futures Group in Chicago.
A fall in the value of the U.S. dollar helped to cap losses. The
U.S. currency hit a six-week low against the euro, increasing the
purchasing power for consumers who buy oil priced in dollars.
"The dollar was weak today and maybe there was some sympathetic
buying with other commodities," said Andy Lebow, vice president at
Jefferies Bache in New York.
"The market (for WTI) got above $98, which had been a formidable
Oil prices rose slightly and briefly after data from the American
Petroleum Institute showed commercial crude oil stocks fell by 7.5
million barrels last week, far more than the 3 million barrel
decrease expected in a Reuters poll.
Gasoline stocks rose by 6.3 million barrels and distillate stocks
rose by 1.2 million barrels, the API data showed.
The EIA will release its oil inventory data at 10:30 a.m. EST (1530
GMT) on Wednesday.
(Additional reporting by Joshua
Franklin in London and Florence Tan and Manash Goswami in Singapore;
editing by Christopher Johnson, Peter Galloway, Phil Berlowitz,
Chizu Nomiyama and James Dalgleish)
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