* Libyan port deal could be done in 2-3 days -govt official
* U.S. crude oil stocks fall 2.4 mln barrels -EIA
* Brent May contract briefly falls to parity with June
* Brent-WTI spread touches tightest point in 6 months
By Elizabeth Dilts
NEW YORK, April 2 Brent oil fell by nearly $1 to
its lowest price in almost five months on Wednesday, pulling
U.S. crude lower with it, on expectations that rebel-held
Libyan ports will reopen within days.
Crude prices on both sides of the Atlantic had tumbled
nearly 2 percent on Tuesday after weak Chinese and European
manufacturing data dampened the outlook for global demand and
news emerged of fresh talks to reopen Libyan ports after months
The downward pressure on Brent prices continued as Libyan
government officials said they could finalize a deal with rebel
groups to reopen the ports, which previously accounted for
600,000 barrels of oil exports per day, within two to three
U.S. crude oil prices tried to rally on bullish data from
the Energy Information Administration (EIA) on Wednesday that
showed domestic crude inventories fell last week. But the
American benchmark held in negative territory on a number of
other economic factors.
A key global stock index edged up to a 6-year high and eight
of 10 S&P 500 sectors were in positive territory, as investors
appeared to be pulling out of commodities like oil to take
advantage of the equities rally, analysts said.
Also, the U.S. dollar was stronger against a basket of
foreign currencies, which weighed on commodities like oil that
are priced in dollars.
"In addition to Libya, the Euro zone economy is so bad they
may have to potentially adopt zero-percent interest rates to get
things going again, and these are not bullish factors for
Brent," said Walter Zimmermann, chief technical analyst at
The Euro zone economy does not look as healthy as the U.S.
economy, which is why U.S. crude is not falling as much,
U.S. crude oil fell to $98.85 a barrel in the wake of
the U.S. data, but pared losses to settle just 12 cents lower at
$99.62 per barrel.
Brent crude oil settled 83 cents lower at $104.79 a
barrel after falling to $103.95, its lowest since Nov. 8.
The Brent May contract briefly fell to parity with the Brent
June contract, threatening to move to a discount, or contango,
which signals ample supplies and weak demand.
Contango has been rare in the Brent market over the past
three years as supply outages have tended to keep the contract
closest to delivery above those for delivery in the future.
The spread between Brent and U.S. oil, or WTI, contracted to
$4.81, its narrowest intra-session point since Sept. 24, led by
declines in Brent. It settled at $5.17.
"As U.S. crude oil is easier to get to the Gulf Coast, that
spread will come in and people will be interested in that as a
speculative position if it (falls below) $5," said Phil
Thompson, director of Mobius Risk Group in Houston.
Zimmermann predicts the spread could tighten to as little as
Surveys showing that factories across Europe eased back on
the throttle in March and that China's vast manufacturing
industry contracted for a third straight month have raised
expectations that oil demand could falter. [ID:nL1N0MT11I}
Crude inventories fell 2.4 million barrels in the week to
March 28, compared with analyst expectations for an increase of
1.1 million barrels. Crude stocks at the Cushing, Oklahoma,
delivery hub fell for the ninth straight week by 1.2 million
U.S. Gulf Coast crude oil imports fell to their lowest since
September 2008, due to the closure of the Houston Ship Channel
for most of the reporting period following a fuel oil spill
after a collision of two vessels.
(Additional reporting by Lin Noueihed and David Sheppard in
London, and Florence Tan in Singapore; Editing by William Hardy
and Nick Zieminski)