Brent crude jumps back above $110, halts three-day slide

A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. South Korea, as a member of the 28-nation IEA, will release 3.46 million barrels oil stocks over 30 days after a meeting with local refiners later on Monday.

NEW YORK (Reuters) - Brent crude prices rallied back above $110 a barrel on Thursday, recovering from a six-week low and halting a three-day slide, while the expiring U.S. front-month October crude dipped slightly and posted a fourth straight loss.

Lending support to the oil futures complex, U.S. gasoline futures jumped 2.6 percent, supported by a fire at Venezuela's 146,000 barrel-per-day El Palito refinery and a decline in the U.S. gasoline inventory, reported by the government on Wednesday.

Gaining 7.54 cents, gasoline settled at $2.9040 a gallon, climbing back above the 100-day moving average of $2.8806.

Heating oil futures gained more than 1 percent.

The Venezuelan fire followed last month's blaze at the OPEC member's Amuay 645,00 bpd refinery. The U.S. Energy Information Administration (EIA) said domestic gasoline stocks fell 1.41 million barrels last week.

Brent's drop to $107.10 a barrel early on Thursday, the lowest price since August 3, pegged the retreat from last Friday's settlement at more than $10.

"We do regard the scale and above all the speed of the price slide as excessive," a Commerzbank research note said. "We expect to see a counter-movement in the next few days."

Brent's premium to U.S. crude tested below $16 a barrel and found support above the $15.50 level a fourth straight day, then bounced back above $17. Wednesday's $15.57 low was the narrowest spread since July 25, according to Reuters data.

News of additional North Sea Forties crude oil cargoes delayed in October because of lower-than-expected production gave Brent additional lift.

Brent November crude rose $1.84 to settle at $110.03 a barrel, but reached $110.60 in post-settlement trading.

U.S. October crude dipped 11 cents, expiring and going off the board at $91.87 a barrel, after slipping to $90.66, just below the 100-day moving average of $90.73 and the lowest price since August 6.

U.S. November crude rose 12 cents to settle at $92.42, having fallen to $90.96 and reaching $93.09 in post-settlement trading.

Total Brent trading volume outpaced U.S. turnover, with Brent 42 percent above its 30-day average, while U.S. crude lagged its 30-day average by 9 percent.

Brent reached $117.95 and U.S. crude $100.42, both four-month peaks, last Friday after the U.S. Federal Reserve's launch of a third monetary stimulus program. The potential for supply disruption due to the ongoing Middle East turmoil and the dispute between the West and Iran over Tehran's controversial nuclear program also provided lift.

But concerns about the economic weakness prompting central bank action, indications that OPEC's top exporter Saudi Arabia is working to lower oil prices, and rising U.S. crude oil inventories helped fuel this week's price slide.

U.S. crude oil stockpiles jumped 8.5 million barrels last week, the EIA's report showed, far more than expected.

WEAK ECONOMIC DATA

Helping curb U.S. crude prices, data on Thursday showed U.S. manufacturing closed out its weakest quarter in three years this month and U.S. jobless claims held near two-month highs last week, suggesting stalled economic growth.

Crude felt pressure from news that the HSBC Flash China manufacturing purchasing index (PMI) for September was 47.8, well below the 50 level that separates contraction from expansion, although a shade higher than the nine-month low of 47.6 reached in August.

The weak China factory data came a day after the Ministry of Commerce said the export outlook in the world's No. 2 oil consumer was poor and demand would remain weak in the next few months.

"If China hits a wall, and Europe falls out from under us, then we're going to be falling back into a recession, and that could be worse than the Great Depression," said Tony Nunan, an oil risk manager at Mitsubishi Corp in Tokyo.

But other analysts noted the weakness reflected in the data might spur government efforts to support economic growth and prompt China to launch its stimulus program, joining the U.S. and Japanese central banks.

(Additional reporting by Peg Mackey in London and Luke Pachymuthu and Ramya Venugopal in Singapore; Editing by John Wallace, Sofina Mirza-Reid and Marguerita Choy)