and weaker US equities deterred buyers.
Oil markets weakened as Wall Street dipped on disappointing retail sales, placing more caution on oil investors anxious to see if recent positive economic reports could translate into more consumer demand.
US crude for February delivery was down $1.76 at $88.54 a barrel at 12:50 p.m. EST (1750 GMT) in heavy volume for a second straight day. In London, Brent crude for February was down $1.20 at $94.30.
Brent's premium over US crude has blown up to as much as $6.55, the highest since May 13, 2010 and threatening to further soar toward a 10-month high of $8.73 reached in February 2009.
Brent's strength has been spurred by continued strong Asian demand while US crude has been pressured by an extended build in stockpiles at the key delivery hub in Cushing, Oklahoma,
despite national stocks having fallen in the last five consecutive weeks.
Expectations of economic recovery and with it rising fuel demand helped to drive US oil to a 27-month high of $92.58 on Tuesday, but in volatile trade, prices fell to a low of $87.85
on Thursday.
Analysts said there could be some price distortion this week as the big investment indexes rebalance their crude futures weightings.
"The rebalancing period is well flagged and as such, some of the recent moves in the market are likely to reflect the anticipated rebalancing to some extent," said James Zhang, an
analyst at Standard Bank Commodities Research.
