Brent Falls on Emerging Markets, U.S. Oil Rises on Cold
"Heating oil is still a reason that refineries can continue to pay up for WTI and not Brent," said Walter Zimmermann, chief technical analyst at brokerage United-ICAP. "But the rest of the world is struggling with at least 10 submerging markets and that's a big negative for the outlook on Brent prices."
The same arctic chill that has boosted heating oil demand has slowed U.S. economic gains, which has dented the outlook for longer-term oil supply.
U.S. crude oil futures ended 76 cents higher at $97.19 a barrel, bouncing after their largest daily percentage loss in nearly a month on Monday as they tumbled with U.S. equities. The contract traded at a session high of $97.71.
A stronger U.S. equities market also provided support.
Oil stocks at Cushing were expected to have dropped by more than 1 million barrels for the first time in five months. Traders have anticipated declining stocks at Cushing, indicating demand for that oil, since the southern leg of the Keystone pipeline went into service late last month.
Those expectations caused the closely watched and heavily traded spread between Brent and West Texas Intermediate to further narrow on Tuesday. The spread settled at $8.59, after narrowing to $8.06 on Monday, its smallest since Oct. 18. It has narrowed by some $7 since mid-January. Brent oil settled 26 cents lower at $105.78, the lowest settlement price since Nov. 8.
Brent's losses were capped by tighter supply in the North Sea after an output glitch at the 200,000 barrels-per-day Buzzard, the largest field that contributes to Forties. The field has restarted and will return to normal levels in days, its operator said.
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