* Brent futures curve flattens as European demand falters
* TransCanada says Gulf Coast oil pipeline fill begins
* China trade data brightens outlook for global demand
(Adds analyst comment, updates to settlement prices)
By Jeanine Prezioso
NEW YORK, Dec 9 Brent crude fell 2 percent on
Monday in reaction to well-supplied markets and limited demand
from European refiners, narrowing the gap between the global and
U.S. oil benchmarks to its slimmest in nearly a month.
Brent's premium to U.S. oil was further eroded by news that
TransCanada Corp has begun filling its 700,000 barrel-per-day
oil pipeline, which will transport crude from the Cushing,
Oklahoma, storage hub to Gulf Coast refiners.
Comments by St. Louis Federal Reserve President James
Bullard hinting that the Fed is focused on lifting its monetary
easing program also pressured prices.
"Every time they come out and change their message, even at
the margin, it moves prices," said Michael Weis, commodity
analyst at Schneider Electric in Louisville, Kentucky.
"The uncertainty behind when that's going to happen, and by how
much, will drive the market."
Brent futures settled $2.22 per barrel lower at
$109.39, falling below the 100-day moving average of $109.70 for
the first time in a week.
U.S. RBOB gasoline and heating oil followed Brent lower.
U.S. gasoline futures settled 1.9 percent lower at
$2.6749 per gallon. U.S. heating oil futures settled 1.4
percent lower at $3.0143 per gallon.
U.S. crude oil prices bounced in a moderate range
from higher to lower, ending the session 31 cents lower at
$97.34, after trading as high as $97.97.
Traders who bet on rising prices on Friday were selling
contracts to unwind trades on Monday, analysts said.
"There's been higher demand to get crude to the refineries
to make distillates," said Bill Baruch, senior market strategist
at iitrader.com in Chicago. "You're also seeing an unwinding of
the spread now with this pipeline coming online. Longs are
liquidating the spread."
Brent oil's premium to U.S. oil narrowed by $1.91 to settle
at $12.05, its narrowest settlement since Nov. 12.
The Brent January futures contract premium to February
touched a one-month low of 18 cents from a high of 46 cents on
Friday, mirroring weakness in physical over-the-counter trades
at a time of weaker European refinery demand, analysts said.
Markets were also brimming with supply, with Saudi Arabia's
production little changed in November from the previous month
and OPEC producers Iraq and Iran making it clear they have no
interest in contributing to a collective cut in output should
one be required next year.
U.S. oil production from the fastest developing shale plays
was expected to rise by more than 50,000 barrels per day in
Losses were limited somewhat by signs of accelerating global
growth in China, the world's second largest oil consumer.
Chinese trade figures on Sunday showed exports well above
forecasts in November. Crude imports by China were up 19.1
percent from the previous month on a daily basis.
Weather-related oil production losses provided some price
support. North Sea oil producers cut output and moved staff from
some platforms as a major storm blasted toward mainland Europe
in what meteorologists warned could be the worst weather to hit
the continent in years.
Cold weather also dented oil and gas production in the
United States and could further crimp output in top
crude-producing states such as Texas and North Dakota.
(Additional reporting by Christopher Johnson in London and
Manash Goswami and Jessica Jaganathan in Singapore; Editing by
Anthony Barker, Dale Hudson, Meredith Mazzilli, Peter Galloway,
and Bob Burgdorfer)