3 Min Read
NEW YORK (Reuters) - Brent crude rose on Wednesday as upbeat Chinese manufacturing data and concerns about the standoff between Iran and the West outweighed data showing a large build in U.S. oil inventories.
U.S. crude turned negative after data from the U.S. Energy Information Administration showed inventories shot up 4 million barrels last week, including a steep 1.5-million-barrel increase at the Cushing, Oklahoma, delivery point for the New York Mercantile Exchanges' s oil futures contract.
Brent also pared gains after the data was released, but remained in positive territory on hopes that Greece appeared closer to clinching a debt-swap deal with its private creditors.
In London, Brent crude for March delivery settled 58 cents higher at $111.56 a barrel, after hitting an early high of $112.82. Front-month Brent rose for a second straight day.
U.S. crude fell 87 cents to close at $97.61, the fourth straight daily decline.
In addition to higher stockpiles, U.S. crude was hampered by data showing a slower pace of job creation in the private sector, although manufacturing growth picked up in January.
Brent's premium against U.S. crude widened to $13.95 at the close, after the WTI/Brent spread jumped intraday to $14.08, the highest since November 15. On Tuesday, Brent's premium closed at $12.50.
Some market analysts said the spread could widen further as Cushing inventories were expected to grow.
"We feel that an additional expansion of a couple more dollars is likely given the growing contrast between a supply re-build at Cushing and an attempt by European refiners to obtain alternative supply sources ahead of an Iranian embargo," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
The EIA data also showed a strong 3 million barrel gain in U.S. gasoline stockpiles as demand continued to slump and stood at levels last seen 11 years ago.
U.S. March RBOB gasoline futures sharply pared gains, closing at $2.8922 a gallon, a gain of just 0.13 cent, off an early high of $2.9487 hit before release of the EIA data.
"U.S. RBOB gasoline is taking a hit from the EIA data and is pulling crude futures lower," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
Early support for crude came from data showing China's factory sector expanded slightly in January, defying expectations for a contraction and supporting hopes that the world's largest energy consumer will continue to beef up oil demand as it avoids a hard landing.
Traders were also eyeing U.S. efforts to further tighten its already harsh sanctions against Iran for its disputed nuclear program as U.S. lawmakers are considering more measures to constrict Tehran's oil revenues.
The measures would single out Iran's national oil and shipping companies and restrict its ability to tap into electronic banking services.
Additional reporting by Robert Gibbons in New York, Simon Falush and Alex Lawler in London; Editing by Alden Bentley and David Gregorio