* US crudes discount to Brent hits 19-month low below $6/bbl
* Brent dips below $100 before recovering
* China credit crunch bolsters oil demand concern
* Fighting in Lebanon sparks fears of Syrian spillover
By David Sheppard and Jeanine Prezioso
NEW YORK, June 24 Brent and U.S. crude prices
rose on Monday, rebounding off a three-week low as record
flooding in Canada's main oil-producing province threatened
exports to the United States.
Major Canadian pipelines that move almost 1 million barrels
per day (bpd) of Alberta oil sands crude remained shut on Monday
after a spill on a smaller line was discovered over the weekend,
a spokesman for operator Enbridge Inc said.
The threat to Canadian exports overshadowed fears that a
credit crunch in China could hit demand in the world's No. 2 oil
consumer, which sent Brent beneath $100 a barrel in early trade,
extending a near-5-percent slide last week.
The U.S. West Texas Intermediate (WTI) benchmark had the
bigger bounce - more than $3 a barrel off a trough of $92.67,
the lowest since June 4. WTI's discount to Brent narrowed to its
smallest since November 2011, touching $5.91 a barrel.
"Imports from Canada should be down," said Phil Flynn,
analyst at Price Futures Group in Chicago. "That's supporting
U.S. crude futures versus Brent."
Brent crude for August delivery settled up 25 cents at
$101.16 a barrel, after bottoming at $99.67. Last week Brent
fell 4.7 percent.
U.S. crude for August delivery settled up $1.49 at $95.18 a
barrel, rallying off of a three-week low of $92.67.
Traders are also watching for the restart of a major crude
processing unit at BP's Whiting refining in Indiana, which draws
crude from Cushing, Oklahoma, delivery point of the WTI
BP was starting up the revamped crude distillation unit at
its 405,000 bpd refinery on Friday, sources familiar with
Whiting's operations said.
"The Enbridge pipeline problems (in Canada) and the Whiting,
Indiana, refinery restart equals a WTI rally," said John
Kilduff, partner at Again Capital LLC in New York.
A Reuters poll of energy analysts showed U.S. crude oil
stocks likely fell last week due to lower imports and higher
refinery activity. The American Petroleum Institure publishes
its report on U.S. energy stocks on Tuesday, followed by the
U.S. Energy Information Administration on Wednesday.
CHINA AND US FED ROIL MARKETS
Trade in Brent was choppy as investors weighed whether a
near $6 sell-off in ten days was overdone. Lingering fears that
a liquidity crunch in China and the potential withdrawal of
monetary stimulus from the U.S. Federal Reserve could hit the
world economy and lower oil demand have pressured prices.
China's central bank said on Monday the overall liquidity in
the financial system was at a reasonable level after interest
rates for short-term funds last week rose to extraordinary
levels as big commercial banks held back on lending in the
Oil traders feared this could slow China's economic growth
further. The International Energy Agency lowered its 2013 oil
demand growth forecast for China earlier this month.
Trade in the U.S. dollar was also choppy as investors
weighed whether U.S. monetary stimulus will be scaled back in
the near term. The greenback strengthened early in the session
before slipping back, helping crude prices to recover by making
it cheaper for holders of other currencies.
SYRIAN VIOLENCE SPREADS INTO LEBANON
Oil prices were also supported by growing fears Syria's
civil war is dragging in other countries, with deadly bomb
attacks in Iraq and fighting in Lebanon.
Lebanese soldiers stormed a complex holding gunmen loyal to
a radical Islamist cleric in the Lebanese port city of Sidon on
Monday and arrested dozens of his supporters, security sources
said, in a second day of clashes fuelled by Syria's civil war.
The fighting has been the deadliest outbreak in Lebanon
since Syria's two-year conflict began, with at least 12 soldiers
killed in the southern Mediterranean port city.
In Baghdad ten car-bomb explosions killed at least 39
people across the city on Monday, police and medical sources
said, adding to the worst sectarian violence in six years.