NEW YORK, July 23 (Reuters) - Oil futures edged higher on Tuesday in volatile trading in the closely watched spread between international benchmark Brent and U.S. crude oil futures.
Brent's premium to U.S. oil futures , which had narrowed sharply last week and briefly inverted on Friday, weakened for a second straight day in whipsaw trading that saw swings of nearly $1.75.
The spread, which settled at $1.21 a barrel on Monday, narrowed to $1.06 during European hours before widening out to $2.68, near the 14-day moving average, in early U.S. activity. It closed at $1.19 as U.S. crude, also known as West Texas Intermediate, staged a late rally relative to Brent, before narrowing to 98 cents in post-settlement activity.
The Brent-WTI spread trade has gripped markets this month, narrowing from near $6 at the start of July and over $23 a barrel in February on expectations new pipeline capacity will alleviate a glut of oil at the Cushing, Oklahoma delivery point for the U.S. crude contract by shipping it to the Gulf Coast.
Walter Zimmermann, chief technical analyst for United-ICAP in Jersey City, New Jersey, said that it was still early to tell if the move marked a reversal of the narrower spread, but added it could be poised to move in further.
"The bigger picture suggests that WTI just completed a bull market correction, then almost certainly the WTI-Brent spread is heading higher."
Front-month September Brent crude oil traded up 27 cents to settle at 108.42 a barrel.
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