US crude futures eased in choppy trading ahead of weekly inventory reports, hemmed in by the prospect that the reports,
starting with industry data due late in the day, will show crude stocks rose again last week and more supply arrived at the Cushing, Oklahoma, delivery hub.
Oil and copper slumped earlier on the threat to demand from another Chinese interest rate hike, the fourth since October.
China’s rate move also pressured Wall Street, though the major stock indexes extended gains by midday.
Brent crude’s premium to US benchmark West Texas Intermediate crude increased to more than $14 intraday for the first time since March 3, after it had reached a record $17.12 a barrel on March 1.
Brent crude for May rose 90 cents to $121.96 a barrel by 1740 GMT, having reached $122.89, the highest front-month price since August 2008.
US May crude fell 60 cents to $107.87, unable to reach Monday’s $108.78 intraday peak, which was the highest since September 2008.
Trading volumes remained well below 30-day and 250-day averages, with total Brent crude trading volumes well above those for US crude after midday in New York.
“WTI is sputtering a bit ahead of inventory data. But Brent continues to march higher on Middle East/Africa supply outages and concerns,” said Tom Bentz, broker at BNP Paribas Commodities Futures Inc in New York.
The back-and-forth fight for the Libyan oil town of Brega reinforced the prospect that a stalemate in the conflict will prolong the loss of the country’s 1.3 million barrels per day of exports.
“The geopolitical problems are closer to Europe and Nigeria’s election delay and Forties cargoes delays, all
hitting sweet crude supply,” said Andrew Lebow, broker at MF Global in New York.
Brent prices were lifted on Monday by news of delays for several April cargoes of Forties crude — which typically sets the level of dated Brent benchmark — due to a brief drop in North Sea Buzzard oilfield production last week.
Worry about Chinese demand being limited by its efforts at curbing inflation could not offset Libya’s conflict and unrest in Yemen and anger in Nigeria over delayed elections.
Ahead of weekly US oil inventory reports from industry and government, an expanded analyst survey expected crude stocks to have risen 1.7 million barrels last week.
Gasoline stocks were expected to be 1.9 million barrels lower and distillates to have posted a small, 200,000-barrel, decline.
