Nearing expiry, Brent November crude rises on North Sea delay

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012.

NEW YORK (Reuters) - Brent crude Prices rallied on Monday on support from North Sea production delays and skepticism about an offer from Iran to negotiate the halting of higher grade uranium enrichment that put pressure on oil prices during the session.

While U.S. crude settled a penny lower, Brent's premium to U.S. crude increased above $24 a barrel intraday, putting it at its highest level since October 2011 as the Brent November contract approaches expiration at the end of Tuesday's session.

U.S. stocks rebounded from last week's losses, advancing on stronger-than-expected retail sales data and Citigroup Inc (C.N) earnings, adding support for Brent and helping U.S. crude prices recover after retreating more than $2 during the session.

"The talk that Iran might be ready to halt uranium enrichment to get out of sanctions provided some pressure, but skepticism about any talks and the stock market moving higher pulled U.S. crude back up," said Mark Waggoner, president at Excel Futures Inc.

Brent received a lift from news of more delays in restarting Nexen's NXT.TO Buzzard field, Britain's largest North Sea oil field, after maintenance.

Senior Iranian officials said over the weekend that Tehran would negotiate on halting higher-grade uranium enrichment if given fuel for a research reactor, reviving a previous offer and putting the possibility of restarting stalled nuclear talks with world powers back in play for oil investors.

But the European Union agreed to more sanctions against Iran's banking, shipping and industrial sectors on Monday. EU foreign policy chief Catherine Ashton said she hoped that turning up the heat on Iran would persuade Tehran to make concessions and that negotiations could resume "very soon."

Brent November crude rose $1.18 to settle at $115.80 a barrel. Monday's trading swung from $113.58 to $115.91.

U.S. November crude dipped 1 cent to settle at $91.85 a barrel. It dropped to $89.79, testing support below the 100-day moving average of $89.88, a technical level monitored closely by chart-watching traders and analysts.

Brent's premium to U.S. crude increased to end at $23.95 based on settlements, reaching $24.20 during the session.

Total crude trading volumes were above 30-day averages for Brent and U.S. crude.

U.S. November RBOB gasoline and heating oil also saw choppy trading, but finished weaker.

Gasoline was fell 4.25 cents to settle at $2.8503 a gallon, back below its 100-day moving average of $2.8790. Heating oil slipped 1.48 cents to settle at $3.2091 a gallon.

Continued robust production from Saudi Arabia and healthy U.S. crude oil inventories, pegged by the government at 28 million barrels above the year-ago period in the week to October 5, helped limit the lift crude prices received from supportive data from China and the United States.

Data over the weekend showed China's September exports grew at roughly twice the rate expected, while imports also increased, possibly an indication that measures to spur growth in the world's second largest economy are working.

But exports to the European Union (EU) - China's biggest overseas market - fell for a fourth month and crude demand in China remained relatively weak even with a sharp rise in September imports versus August.

U.S. retail sales rose in September as Americans bought more of everything from cars to gasoline and electronics, but oil analysts noted the higher receipts at retail fuel stations reflected higher pump prices and could hamper consumer spending in other areas.

Other U.S. data on Monday pointed to an economy feeling the effects of cooling global growth, with New York state factory activity shrinking in October, a third straight contraction.

(Additional reporting by Alice Baghdjian in London and Manash Goswami and Manolo Serapio Jr. in Singapore; Editing by Bob Burgdorfer, David Gregorio and Marguerita Choy)