NEW YORK (Reuters) - Brent oil edged higher on Tuesday, snapping three days of declines and lifting its premium to slumping U.S. crude back above $18 a barrel, as supportive German economic growth helped counter political turmoil in Greece.
Anticipation that inventory reports would show U.S. crude stocks rose an eighth straight time last week, adding to record stockpiles at Cushing, Oklahoma, helped pressure U.S. crude and increase its price deficit to Brent, brokers and traders said.
Industry data from the American Petroleum Institute (API), released after crude futures had settled, did show U.S. crude stocks rose 6.6 million barrels in the week to May 11, a much bigger rise than expected by analysts. <API/S>
Crude stocks at Cushing, delivery point for the U.S. light sweet crude contract also rose, by 2.8 million barrels.
The approach of the June Brent contract’s expiration on Wednesday also helped boost the premium to U.S. June crude to $18.26 a barrel based on settlements.
Brent’s premium to U.S. crude pushed above $18 for the first time since April 16, when news of this week’s planned reversal of the Seaway crude pipeline broke.
The pipeline will allow stockpiles bottlenecked in the U.S. Midwest to be sent to the refinery-rich Gulf Coast. However, the initial capacity after the reversal will be only 150,000 barrels per day, insufficient in the short term to drain much of the Midwest glut, traders said.
Brent June crude rose 67 cents to settle at $112.24 a barrel, recovering from a $110.93 low and reaching $112.67.
Brent fell to $110.04 on Monday, after reaching $120.02 on May 1, as OPEC’s increased production, rising U.S. inventories and signs of slowing economic growth weighed on prices.
U.S. June crude fell a third straight session, falling 80 cents to settle at $93.98 a barrel. It fell as low as $93.02 in post-settlement trade, lowest price since December 16.
Brent and U.S. crude, heating oil and gasoline futures all continued to sport relative strength index (RSI) readings below 30. A reading under 30 suggests oversold conditions to investors who follow technical indicators.
U.S. heating oil futures closed slightly higher, while gasoline dipped more than a penny. Both settled under $3 a gallon.
Better-than-forecast German first-quarter GDP data raised hopes that Germany might steer its way through the European debt crisis as the euro zone’s economy avoided recession but posted zero growth in the quarter.
But Greece faces a new election after attempts to form a government collapsed, enhancing the possibility that parties opposed to the terms of a European Union bailout could win power.
The Greek political impasse weighed on equities, sent the euro to a four-month low against the dollar and key industrial feedstock copper to its own four-month low. <MKTS/GLOB> <MET/L>
“The German GDP gave the market a little hope and recent problems at the North Sea Buzzard field and Europe’s refineries due back from seasonal maintenance have provided Brent with support,” said Andy Lebow, senior vice president for energy futures at Jeffries Bache LLC.
In addition to crude stocks rising 6.6 million barrels, the API reported U.S. gasoline stocks fell 2.6 million barrels and distillate stocks fell 1.6 million barrels.
U.S. crude stocks were expected to have risen by 1.7 million barrels, a Reuters survey of analysts taken ahead of weekly reports showed. Distillate stocks were pegged to be down 600,000 barrels and gasoline stocks to have fallen 500,000 barrels.
The weekly inventory report from the U.S. Energy Information Administration follows at 10:30 a.m. EDT (1430 GMT) Wednesday.
U.S. gasoline demand increased 4.5 percent last week from the previous week as pump prices fell, MasterCard said in its weekly report, but remained down versus a year ago, by 3.6 percent.
Increased production from Saudi Arabia, Libya and Iraq has helped cushion global oil supply as U.S. and European Union sanctions continue to limit Iran’s exports ahead of an EU embargo on Iranian barrels set for July.
The U.N. International Atomic Energy Agency and Iran will meet again next week after a “good exchange of views” during two days of talks on Tehran’s disputed nuclear program, a senior U.N. official said.
Additional reporting by Gene Ramos in New York, Julia Payne in London and Jessica Jaganathan in Singapore; Editing by Dale Hudson, Bob Burgdorfer and Sofina Mirza-Reid