* Brent moves briefly back over $110, then loses momentum
* U.S. crude inventories seen down last week
* Market await OPEC meeting Wednesday
(Adds detail on spread between US and Brent crude)
By Lorenzo Ligato
NEW YORK, June 10 Brent crude reversed course to
end down on Tuesday, while U.S. oil also fell due to a stronger
dollar and profit taking by traders following strong gains on
Brent futures closed at $109.99 on Monday, the highest in
nearly two weeks, supported by positive economic data from China
and the United States, the world's two largest energy consumers.
But momentum stalled on Tuesday as Brent rose above $110,
only to later drop below the key mark, despite positive economic
"A strong dollar and a not-so-strong stock market are double
trouble for energy prices," said Walter Zimmerman, chief
technical analyst at United-ICAP.
Brent settled down 47 cents at $109.52 a barrel on
Tuesday, after hitting a high of $110.32. U.S. oil
slipped 6 cents to settle at $104.35 a barrel after ending up
1.7 percent on Monday, its biggest daily gain since April.
The spread CL-LCO1=R between the two benchmarks, which has
been narrowing over the past two weeks, closed at $5.17, its
lowest point since April 15.
Analysts polled by Reuters expected a weekly inventory
report to show a 1.5 million-barrel drop in U.S. crude stocks,
signaling healthy consumption as the summer driving season gets
The American Petroleum Institute will release its inventory
data at 4:35 p.m. EDT (2035 GMT) on Tuesday, followed by data
from the U.S. Energy Information Administration on Wednesday.
China's central bank on Monday announced a package to relax
policy in weaker areas of the economy including farming and
small- and medium-sized companies, an action that was expected
to promote growth and potentially bolster fuel demand.
The oil market was on alert for any surprises from the
Organization of the Petroleum Exporting Countries (OPEC), which
meets in Vienna on Wednesday to decide oil output targets.
The cartel, which pumps a third of the world's oil, has said
it is happy with global oil prices and is expected to maintain
its production target at 30 million bpd.
"We're starting to see global demand pick up a pace and get
stronger," said Carl Larry, chief executive of consultancy Oil
Outlooks in Houston. "My expectation is that the big talk
tomorrow will be about spare capacity."
United Arab Emirates Energy Minister Suhail bin Mohammed
al-Mazroui said on Tuesday that oil prices are at a suitable
level for OPEC members and the group sees no shortage of supply,
"Oil prices have been steady over the past period and at a
comfortable level for all members."
Libyan Oil Minister Omar Shakmak agreed, saying an oil price
close to $110 a barrel is good for the oil market. "It's for the
benefit of producers and customers alike."
(Additional reporting by Christopher Johnson in London and
Manash Goswami in Singapore; Editing Peter Galloway and Alden