Brent's gain of more than $1 followed a drop of more than $3 this
week, which narrowed its gap with the U.S. oil benchmark, a closely
watched and heavily traded spread, to less than $5, the slimmest
On Thursday, as Brent regained ground, the spread widened back out
by $1 to settle just below $6.
Russia raised the price it charges Ukraine for its gas on Thursday
for the second time this week, almost doubling it in three days.
"The risk premium's been rising all day," said Phil Flynn, an
analyst at the Price Group in Chicago.
"You got a little short-covering rally; it sure plays into the mood
that we've seen today."
Brent crude rose $1.36 to settle at $106.15 a barrel, after notching
a high of $106.32 on the day. U.S. crude , or West Texas
Intermediate (WTI), rose by 67 cents a barrel, to settle at $100.29.
Brent's premium to U.S. crude settled at $5.86 after contracting on
Wednesday to $4.81, its lowest point since September.
U.S. RBOB gasoline futures rose by 1.6 percent, gaining more than 4
cents to $2.91 a gallon.
"I think the products caught the bid on the Brent rally," said Gene
McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Brent prices dropped earlier this week as hopes were lifted that an
eight-month standoff that dried up oil exports and revenue in Libya
would end soon. A government spokesman said on Wednesday an
agreement with rebels to reopen some oil ports could be finalized in
two to three days.
The restart of Libya's eastern oil ports would release about 600,000
barrels per day (bpd) of crude. Libya's acting oil minister, Omar
Shakmak, said on Thursday there were "good intentions" that could
see the blockade end in days.
But analysts were cautious.
"The rebels have imposed conditions that are virtually impossible to
meet, demanding, for example, a referendum on greater autonomy in
the eastern provinces," said a note from Commerzbank.
"It is by no means clear that the export terminals will be opened,
so we envisage only limited downside potential to at most $103 per
barrel (for Brent) ... and expect to see the price recover if the
opening of ports were to be delayed."
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McGillian said that the Libya concern contributed to Brent's rise,
which pushed the spread back out.
"The minute you get any word that Libyan production is not coming
back onto the market, or there's a hiccup in that, if you had timed
the spread correctly, that's when you take some profit out," he
Libya's Shakmak said the southwestern 340,000 bpd El Sharara field,
the El Feel field and an oil condensates pipeline from the Wafa
field to the Mellitah port were still closed by protesters.
Libya's crude output has fallen to about 150,000 bpd from 1.4
million bpd in July, when a wave of protests started across the
north African country. Its proximity to Europe, just across the
Mediterranean, makes it a strategic energy supplier.
Even if a deal is clinched with rebels who have blockaded eastern
ports, some major fields and a pipeline in the country's southwest
may remain closed by separate protests.
In the short term, demand for Libyan oil is likely to be limited due
to reliability issues, while shipping and insurance costs were
expected to rise in light of recent hostilities.
Oil may draw support from data that showed U.S. companies stepped up
hiring in March, offering new evidence on Thursday the economy was
regaining momentum after a weather-driven lull over the winter.
(Additional reporting by Peg Mackey in London, Florence Tan in
Singapore; editing by William Hardy, Jeffrey Benkoe and Peter
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