NEW YORK (Reuters) - U.S. crude settled up more than 1 percent on Tuesday, buoyed by gains on Wall Street and higher gasoline prices, while Brent oil advanced less ahead of the expiry of its front-month contract, narrowing the transatlantic spread to the lowest in eight months.
U.S. crude rallied almost through the day, rising 2 percent at one point on bets that weekly inventories of oil in the United States fell last week after four straight weeks of gains.
The market’s euphoria briefly snapped in the afternoon on news the White House would not back a bill by rival Republicans to repeal a 40-year-old ban on U.S. crude exports. While the White House was never expected to support the bill, its decision still sent U.S. crude prices temporarily into negative territory before a late rally in gasoline brought the market back up.
U.S. crude’s front-month settled up 59 cents, or 1.3 percent, at $44.59 a barrel.
London-traded Brent, the global oil benchmark, settled up 26 cents at $46.63 a barrel as the October contract, which served as its front-month LCOc1, expired. In Monday’s trade, Brent lost $1.77, or almost 4 percent.
U.S. crude’s outperformance versus Brent narrowed the spread between the two benchmarks to an eight-month low, pushing it under $2 a barrel earlier on Tuesday.
The outlook for U.S. crude improved after positive forecasts this week by the EIA, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC).
In Tuesday’s session, players were also betting on positive U.S. oil inventory data for last week after the estimate on Monday by market intelligence firm Genscape that stockpiles at the key U.S. crude delivery point at Cushing, Oklahoma fell by 1.8 million barrels in the week to Sept. 4.
A preliminary Reuters poll indicated that U.S. crude stockpiles likely remained flat last week, after four straight weeks of gains.
The American Petroleum Institute (API) will issue its weekly report on U.S. inventories later on Tuesday, at 4:30 p.m. EDT (2030 GMT). The U.S. Energy Information Administration will issue its data on Wednesday.
“The market remains oversupplied, but the pace of stock builds is moderating,” London-based Energy Aspects said in a report.
Additional reporting by Alex Lawler and Henning Gloystein; Editing by Marguerita Choy and Lisa Shumaker