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 A sharp mid-afternoon retreat in U.S. ultra low-sulfur diesel
futures (ULSD), which had rallied by as much as 5 percent last week,
also helped pare oil's gains, even as snowstorms blanketed the U.S.
East Coast.
Volatile U.S. stock market trading and a poll showing analysts are
predicting a rise in crude oil inventories for the first time in
eight weeks added to the pull-back.
Prices kicked higher earlier Tuesday after the International Energy
Agency (IEA) said that world oil consumption would rise by 1.3
million barrels per day (bpd) in 2014, more quickly than previously
expected.
"The main feature today is the support from the IEA report we saw
this morning," said Dominick Chirichella, senior partner at Energy
Management Institute.
Brent crude settled 38 cents higher at $106.73 a barrel after rising
earlier in the session to $108 per barrel.
Front-month U.S. February crude, which expired at the close of
trade, ended 62 cents higher at $94.99. U.S. crude oil for March
delivery, which will become the front-month contract Wednesday, rose
37 cents to $94.97.
There was no settlement on Monday on the New York Mercantile
Exchange due to a U.S. holiday.
The Brent-WTI spread <CL-LCO1=R>, which traded as tight as $11.16 on
Friday, widened to settle at $11.76.
ULSD settled 0.1 percent lower at $3.0147 a gallon, after racing as
high as $3.0834 a barrel in advance of the snowstorm and cold front
that could boost heating fuel demand.
"Heating oil was overbought and fell back on some of its
profit-taking," said Addison Armstrong, director of market research
at Tradition Energy in Stamford, Connecticut.
STOCK BUILD SEEN
U.S. equities mostly rose Tuesday in volatile trading that ended
with the S&P 500 on pace to snap a two-session decline thanks to a
material stocks rally, though the Dow fell on disappointing earnings
by three of its components.
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Analysts in a Reuters poll taken ahead of Wednesday's American
Petroleum Institute inventory report predicted gasoline stocks
increased 1.6 million barrels last week. However, the same analysts
forecast a 400,000 barrel draw on distillates, including heating oil
and diesel.
Weekly oil inventory data will be released a day late due to the
Monday holiday. The API will release its data at 4:30 p.m. EST (2130
GMT) on Wednesday. The U.S. Energy Information Administration will
release its data at 11 a.m. EST (1600 GMT) on Thursday.
Brent was also boosted by news from Libya that five officials,
including the oil minister, resigned, citing the prime minister's
inability to "provide security...in the electricity and oil
sectors,"
The announcement came after Libyan prime minister vowed on Sunday to
recover important oil ports from protesters who have controlled them
since summer.
Oil received more support from an increase in risk appetite across
the market after the People's Bank of China dumped more than 255
billion yuan ($42 billion) into the financial system, easing
concerns about a credit crunch that could hamper growth in the
world's second-biggest economy.
Uncertainty in South Sudan also supported Brent as insurgents
disputed the South Sudan president's claim that his soldiers retook
the capital of the oil-rich Upper Nile region.
Iran meanwhile agreed to a preliminary deal that stops its nuclear
operations, raising prospects the OPEC member will eventually
increase oil exports, which curbed gains in Brent oil.
(Additional reporting by Simon Falush
in London and Manash Goswami in Singapore; editing by Anthony
Barker, Peter Galloway and Meredith Mazzilli)
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