Oil ends flat in thin trade, Brent/WTI spread narrows
NEW YORK (Reuters) - Crude oil prices ended near flat in a sluggish day of trading on Tuesday as stronger equity markets put a floor under prices and Brent's premium over U.S. crude slid below $6.
Some trading was attributed to squaring positions as traders bought contracts to cover short bets made the previous session, when prices dropped to a three-week low, said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
Oil prices bounced slightly off a three-day rout last week that followed news that the U.S. Federal Reserve would scale back its quantitative easing program. The Fed news boosted the dollar, making commodities priced in the greenback more expensive for holders of other currencies.
Equity markets were higher after strong economic data on U.S. durable goods orders and prices for existing single-family homes.
But the data did little to guide a rally in the oil market and acted more as a "double-edged sword", McGillian said.
"It means the Fed will pare back stimulus quicker than people think and people are waiting to see what the market will look like once the Fed takes its foot off the accelerator."
Front-month U.S. crude oil futures finished the day 14 cents higher at $95.32 per barrel. U.S. crude is down nearly $4 from a $99.01 high made last Wednesday.
Brent crude oil ended 10 cents higher at $101.26 per barrel. Brent has dropped more than $5 from its high near $107 last week.
Gasoline and heating oil futures also ended flat, at $2.73 per gallon and $2.85 per gallon, respectively.
CANADIAN PIPELINES, OIL DATA
Heavy rains and flooding in Alberta, Canada's main oil-producing province, may have caused some pipelines to shut over the weekend.
But by Tuesday, Enbridge Inc (ENB.TO) had returned a major section of its Athabasca oil pipeline to service and it said other lines are expected back in the coming days.
The specter of lower imports from Canada into the United States sharply narrowed the premium of global benchmark Brent crude oil to U.S. benchmark West Texas Intermediate.
The spread settled at $5.94 after hitting $5.60 during the session, within 2 cents of its narrowest point reached in November 2011 at $5.58. In January 2011, the spread was as narrow as $5.18.
TransCanada Corp (TRP.TO) said on Tuesday that its Keystone crude oil pipeline system is operating normally despite earlier reports that said flows had slowed.
U.S. crude oil stocks were down by 28,000 barrels, data from the American Petroleum Institute data showed. Forecasters had expected a fall of 2 million barrels.
Oil prices were little changed after the data's release.
On Wednesday, the U.S Energy Information Administration will release its crude oil data report expected to show U.S. commercial crude oil stocks likely fell last week by 1.7 million barrels as refinery activity increased, according to a Reuters poll.
Oil stocks are still near record highs, also curbing rallies in the oil market, analysts said. (Additional reporting by Alex Lawler in London and Jessica Jaganathan; Editing by Jason Neely and David Gregorio)
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