* Spread between Brent and WTI widens
* Dollar down against the euro
* China inflation data reduces fears of tightening
* Concerns about Iran, North Korean tensions supportive to
(Updates with API data, adds technical analysis)
By Anna Louie Sussman
NEW YORK, April 9 Brent crude oil futures rose
on Tuesday, posting their biggest gain since late December as a
weak dollar and tame Chinese inflation data drew investors to
U.S. crude oil prices also rose, reaching $94.48 during the
session and briefly exceeding the 50-day moving average
of$94.44, a technical level closely monitored by chart-watching
analysts and traders.
But Brent prices rose more sharply, allowing its premium
over U.S. crude to widen past $12, a day after it narrowed to
just over $11, the lowest level since June.
"The spread had narrowed considerably over the past few
weeks, so we have some unwinding of that spread," said Stephen
Schork, the editor of commodity newsletter The Schork Report.
"That, coupled with the selloff in the dollar, was pushing
money into the oil market," Schork said.
The euro rose to $1.31, its highest since mid-March, making
dollar-denom`inated commodities more affordable for holders of
Chinese government data showed inflation slowing. This eased
concerns the Chinese central bank would tighten monetary policy.
"The idea that central banks are going to continue in their
monetary policies and we'll see liquidity continue to expand
makes commodities an attractive investment, and that's providing
support for oil prices," said Gene McGillian, an analyst at
Tradition Energy in Stamford, Connecticut.
U.S. equities rose, with the Dow Jones Industrial Average
reaching a record intraday high. [ID: nL2N0CW1JM]
Brent May crude closed at $106.23 per barrel, up
$1.57. During the session it fell as low as $104.27, not far
from the lowest price since July, the previous session's low
point of $103.40.
U.S. May crude closed at $94.20 a barrel, up 84
cents. It touched a session low of $92.86.
The spread between Brent and U.S. West Texas Intermediate
(WTI) closed at $12.03 a barrel, widening from $11.30 at the
previous session's close.
It was the second day of gains for Brent, which on Friday
had dipped on the 14-day relative strength index to below 30, a
technical signal that a commodity has been oversold. On Tuesday,
Brent topped 40 on that index.
Brent trading volumes were 3 percent above 30-day average,
and U.S. crude volumes were near the 30-day average.
The lack of progress in talks between Iran and western
powers over Tehran's nuclear program and the heightened tensions
on the Korean peninsula also remained factors supportive to oil
prices, traders and analysts said.
The dollar fell broadly as traders booked profits after the
U.S. currency's rally against the yen since the Bank of Japan
announced aggressive monetary easing plans last week.
Late on Tuesday afternoon, the American Petroleum Institute
released data showing U.S. crude oil stocks rose 5.1 million
barrels for the week ended April 5, higher than the 1.4 million
predicted by a Reuters poll of analysts.
At Cushing, stocks were up 888,000 barrels. Gasoline stocks
increased by 2 million barrels while distillate stocks fell 1.3
million barrels, both larger declines than anticipated.
The U.S. government's Energy Information Administration
(EIA) releases its more closely watched report at 10:30 am EDT
(1430 GMT) on Wednesday.
Iran said operations had begun at two uranium mines and a
milling plant and that Western opposition would not slow its
nuclear work. Iran also told the U.N.'s
International Atomic Energy Agency an earthquake did not damage
the Bushehr nuclear power plant.
North Korea warned foreigners to evacuate South Korea to
avoid being dragged into "thermonuclear war."
Russia said the Group of Eight (G8) was in agreement in
rejecting North Korea's recent provocative behaviour and urged
all sides to pursue diplomacy to calm the increasingly tense
U.S. OIL INVENTORIES
A fresh snapshot of U.S. oil inventories is expected to show
crude stocks rose again last week. The most recent report from
the U.S. Energy Information Administration showed stockpiles at
near record levels.
A Reuters survey of analysts on Monday showed crude oil
stockpiles were expected to rise by 1.4 million barrels.
Distillate and gasoline inventories were expected to be
The American Petroleum Institute's weekly inventory report
is due at 4:30 p.m. EDT (2030 GMT) on Tuesday, with the EIA's
report following on Wednesday at 10:30 a.m. EDT (1430 GMT).
(Additional reporting by Robert Gibbons and Matthew Robinson in
New York, Christopher Johnson in London and Ramya Venugopal in
Chennai, India; Editing by Gunna Dickson, Chris Reese and David