NEW YORK (Reuters) - Brent crude futures fell on Tuesday as concerns persisted that the spreading euro zone debt crisis will curb demand for oil, while U.S. crude turned higher, narrowing the spread between the two futures contracts.
Trading was choppy and oil was also pressured by expectations that Saudi Arabia intends to keep production steady despite crude’s recent price retreat, even as OPEC price hawks call for lower production ahead of a Thursday meeting in Vienna.
U.S. crude bounced after falling to a fresh 2012 low, then running into firm support just above $81 a barrel for the third time since June 4.
Strong stock index futures and a higher open on Wall Street also helped lift U.S. crude.
Brent, even while on track for a fourth day of losses, also has managed to stay above its $95.63 low for 2012 struck June 4.
“Europe is significantly affecting the growth outlook, and given China is already weak, further deterioration in the euro zone crisis could tip the global economy into a recession,” said Guy Wolf, a macro strategist at Marex Spectron.
Along with weak refinery utilization in Europe, the more than $1 drop in Brent’s premium to U.S. crude was attributed to expectations weekly reports will show lower crude stocks at Cushing, Oklahoma, as the reversed Seaway pipeline allows supply to be moved to the refinery-rich Gulf Coast.
Brent crude fell 92 cents to $97.08 a barrel by 12:15 p.m. EDT (1615 GMT), having fallen as low as $96.62.
U.S. crude rose 37 cents to $83.07 a barrel, after falling to $81.07, lowest intraday price since October 6, but only 4 cents below Monday’s low.
Crude futures ended lower on Monday and extended losses in post-settlement trading, pulling back after rallying more than $2 on a euro zone agreement on a rescue package for Spain’s banks.
Rekindled concerns that Madrid’s financial woes will worsen and the debt crisis continue to spread caused the initial rescue rally to fade.
Additional reporting by Julia Payne in London and Manash Goswami in Singapore; Editing by David Gregorio