* Brent trims losses after dropping $3 per barrel
* Brent-WTI spread widens on concern over WTI glut
* U.S. retail sales, consumer sentiment drop
(Adds detail on pipeline diversion, analyst quote)
By Anna Louie Sussman and David Sheppard
NEW YORK, April 12 Brent crude oil fell to a
nine-month low near $101 a barrel on Friday as a broad investor
sell-off in commodities triggered a fall as much as $3 a barrel,
but the global oil benchmark pared losses in afternoon New York
trade as bargain hunters emerged.
The cross-commodity rout started in gold on Friday after the
precious metal fell below $1,500 an ounce for the first time
since July 2011. An unexpected contraction in U.S. retail sales
added to pressure on oil, grains and metals as investors moved
Brent found some support in the afternoon as traders started
buying the global benchmark while selling U.S. crude oil,
traders said, on news of a large increase of Canadian crude oil
flows into Cushing, Oklahoma, delivery point.
In early trade, Brent crude for May delivery fell
more than $3 a barrel to hit a $101.09, the lowest prices since
July. It recovered by more than $2 by the close, settling at
$103.11 a barrel, down $1.16 on the day. Brent has fallen by
around 13 percent since February as uncertainty about the
strength of global demand has mounted.
U.S. crude for May delivery lost $2.22 a barrel to settle at
$91.29 a barrel, up from an earlier low of $90.27 a barrel. The
May contract closed below its 200-day moving average of $91.51 a
barrel, a key technical indicator watched by traders.
"There's an underlying anxiety in the crude market about
demand growth going forward into the second half of the year,"
said Andy Lebow, vice president at Jefferies Bache in New York.
"Gold came off and industrials are really getting hit today.
That's part and parcel of the anxiety over global demand
The spread between Brent crude and U.S. crude widened to
around $12 a barrel Friday afternoon as U.S. crude prices were
pressured by reports of increased flows into the U.S. oil
contract delivery hub at Cushing, Oklahoma.
Genscape, an independent company that monitors pipelines,
said it detected a near-doubling of flows into Cushing on the
Steele City leg of the Keystone line to more than 500,000
barrels per day.
Large volumes of crude are being diverted as the shutdown of
an Exxon Mobil pipeline backs up oil at Patoka, Illinois. Exxon
Mobil's near 90,000 bpd Patoka-to-Texas Pegasus pipeline has
been shut for two weeks after spilling crude in an Arkansas
Flows on the Keystone line, which carries heavy Canadian
crudes from Alberta, normally split at Steele City, Nebraska and
then either flow to Cushing or Patoka, Illinois.
For the week, Brent lost 1 percent while U.S. crude lost 1.5
percent. U.S. RBOB gasoline futures have lost around 2
percent since Monday to near $2.80 a gallon.
Data from the U.S. Commodity Futures Trading Commission
released on Friday showed hedge funds trimmed their bets on
higher U.S. crude oil prices by 6,500 futures and options
contracts in the week to April 9 to 239,580.
WEAK RETAIL SALES, OIL DEMAND
Oil's price slide was hastened by reports that showed U.S.
retail sales contracted in March for the second time in three
months and consumer confidence weakened in April, pointing to
slowing economic growth in the world's biggest oil consuming
Friday's weak data from the United States followed forecasts
for lower global oil demand growth for 2013 released this week
by the International Energy Agency, the U.S. Energy Information
Administration and the Organization of the Petroleum Exporting
"As oil fundamentals on a global and domestic basis continue
to deteriorate, we will further emphasize that the complex will
remain highly reactive to even the slightest indication of
negative macro headlines," Jim Ritterbusch, president of
Ritterbusch and Associates in Illinois, wrote in a research
World equities prices also retreated, with news that Cyprus
would ask for billions more in bailout money adding to pressure.
Geopolitical tensions in the Middle East, with Syria's civil
war and no resolution in sight of Iran's dispute over its
controversial nuclear program, remain a focus for oil investors.
In Seoul on Friday, U.S. Secretary of State John Kerry
warned North Korea it would be a "huge mistake" to test launch a
medium-range missile and said the United States would never
accept the reclusive country as a nuclear power.
Also demanding investors' attention was a U.S. government
agency saying North Korea has a nuclear weapon it can mount on a
missile, adding an ominous dimension to threats of war by
Pyongyang, but the assessment was swiftly dismissed by several
U.S. officials and South Korea.
(Additional reporting by Robert Gibbons in New York, Peg Mackey
in London and Manash Gaswami in Singapore; Editing by Bob
Burgdorfer and Grant McCool)