(Updates prices to settlement)
By Anna Louie Sussman
NEW YORK, April 3 Brent crude gained more than
$1 on Thursday, widening its premium to U.S. crude, as doubts
persisted that a lasting deal was imminent to reopen vital
Libyan oil ports and as tension between Russian and Ukraine
Brent's gain of more than $1 followed a drop of more than $3
this week, which narrowed its gap with the U.S. oil benchmark, a
closely watched and heavily traded spread, to less than $5, the
slimmest since September.
On Thursday, as Brent regained ground, the spread widened
back out by $1 to settle just below $6.
Russia raised the price it charges Ukraine for its gas on
Thursday for the second time this week, almost doubling it in
"The risk premium's been rising all day," said Phil Flynn,
an analyst at the Price Group in Chicago.
"You got a little short-covering rally; it sure plays into
the mood that we've seen today."
Brent crude rose $1.36 to settle at $106.15 a
barrel, after notching a high of $106.32 on the day. U.S. crude
, or West Texas Intermediate (WTI), rose by 67 cents a
barrel, to settle at $100.29.
Brent's premium to U.S. crude settled at $5.86 after
contracting on Wednesday to $4.81, its lowest point since
U.S. RBOB gasoline futures rose by 1.6 percent,
gaining more than 4 cents to $2.91 a gallon.
"I think the products caught the bid on the Brent rally,"
said Gene McGillian, an analyst at Tradition Energy in Stamford,
Brent prices dropped earlier this week as hopes were lifted
that an eight-month standoff that dried up oil exports and
revenue in Libya would end soon. A government spokesman said on
Wednesday an agreement with rebels to reopen some oil ports
could be finalized in two to three days.
The restart of Libya's eastern oil ports would release about
600,000 barrels per day (bpd) of crude. Libya's acting oil
minister, Omar Shakmak, said on Thursday there were "good
intentions" that could see the blockade end in
But analysts were cautious.
"The rebels have imposed conditions that are virtually
impossible to meet, demanding, for example, a referendum on
greater autonomy in the eastern provinces," said a note from
"It is by no means clear that the export terminals will be
opened, so we envisage only limited downside potential to at
most $103 per barrel (for Brent) ... and expect to see the price
recover if the opening of ports were to be delayed."
McGillian said that the Libya concern contributed to Brent's
rise, which pushed the spread back out.
"The minute you get any word that Libyan production is not
coming back onto the market, or there's a hiccup in that, if you
had timed the spread correctly, that's when you take some profit
out," he said.
Libya's Shakmak said the southwestern 340,000 bpd El Sharara
field, the El Feel field and an oil condensates pipeline from
the Wafa field to the Mellitah port were still closed by
Libya's crude output has fallen to about 150,000 bpd from
1.4 million bpd in July, when a wave of protests started across
the north African country. Its proximity to Europe, just across
the Mediterranean, makes it a strategic energy supplier.
Even if a deal is clinched with rebels who have blockaded
eastern ports, some major fields and a pipeline in the country's
southwest may remain closed by separate protests.
In the short term, demand for Libyan oil is likely to be
limited due to reliability issues, while shipping and insurance
costs were expected to rise in light of recent hostilities.
Oil may draw support from data that showed U.S. companies
stepped up hiring in March, offering new evidence on Thursday
the economy was regaining momentum after a weather-driven lull
over the winter.
(Additional reporting by Peg Mackey in London, Florence Tan in
Singapore; Editing by William Hardy, Jeffrey Benkoe and Peter