NEW YORK: US oil futures recouped losses in choppy trade yesterday while European Brent crude slid, as traders bet that an abrupt slump earlier this week in the hotly traded Brent-WTI spread had gone too far.
US petrol prices led the oil complex higher, rebounding from near their lowest since June 2012 after an overnight fire shut down a key refinery near Chicago. Although fuel stocks are relatively high, the unplanned outage threatens to tighten supplies at a time when many refineries are shut for work.
Dealers were also focused on ructions in the spread between US West Texas Intermediate (WTI) and Brent futures, which hit a six-month high of more than $13 a barrel midday on Wednesday before snapping back to around $10 yesterday.
The US crude oil benchmark snapped three sessions of losses and ended the day 25 cents higher at $97.11 a barrel, after touching a four-month low of $95.95.
US crude oil prices have been declining for the last three sessions on rising supply. Oil inventories last week hit the highest level since June, according to government data. But traders said the spread had gone too far, given the likely pick-up in demand as refiners return from maintenance.
Brent crude oil ended 81 cents lower to $106.99 a barrel, a fresh two-month settlement low. Brent’s premium over US oil narrowed by as much as $1.13 per barrel to $9.81, in intra-day trade, almost touching the 200-day moving average of $9.77. It settled at $9.88.
In the oil products market, US petrol futures rebounded off 16-month lows following news of a fire at the crude unit of Citgo’s 174,5000 barrel per day Lemont, Illinois refinery.
RBOB petrol futures reversed three days of losses and gained 3.73 cents to end at $2.5896 a gallon after dipping to fresh 16-month low of $2.5417. Heating oil traded down to a three month-low of $2.8974 a gallon and settled 2.3 cents lower at $2.9003. Reuters