NEW YORK: Brent crude oil fell more than $1 on Tuesday as worries about market fundamentals curbed an early rise that had brought the price close to $106 a barrel on strong German data and concern about tension in the Middle East.
Fears of supply disruption after the Israeli air strikes on Syria close to Damascus boosted Brent early in the session, and it got close to the highest level in nearly a month following its largest three-day rally since August 2012.
Those fears subsided and Brent fell in the absence of clear signs of strengthening global demand, traders said. In a monthly report, the US Energy Information Administration (EIA), a government body, cut its forecasts for oil consumption in 2013 and 2014 due to declines in Europe and Japan.
"We're getting into an area where we've had such a strong run-up in price over the past few days, when really from a fundamental standpoint it's hard to justify. We got up here on a lot of froth," said Stephen Schork, editor of The Schork Report in Pennsylvania.
Brent crude fell $1.06 to settle at $104.40 a barrel. During the session it reached $105.94, its highest since April 11. Brent has rebounded over $5 a barrel since falling below $99 last Wednesday.
It continued its slide in post-settlement trading, falling to $104.09 at 4:44 p.m. (2044 GMT).
US oil futures lost 54 cents to settle at $95.62.
The spread between Brent and US crude largely traded in a range between $9 and $10 throughout the session. It widened out to above $10 early on, the first time it went above $10 since April 29, before settling at $8.78.
Traders are watching for the startup of the 405,000-bpd BP Whiting refinery in Indiana which was estimated to come back online by the end of June. Industry group Genscape reported weak heating from both of the refinery's furnace stacks, indicating possible testing.
Positive data on German industrial orders rising again in March helped to lift prices in earlier trading.
Oil prices trended lower beginning around 10 a.m. EDT (1400 GMT), tracing losses on the S&P 500 and the Dow Jones industrial average. But they parted ways with equities around 11 a.m. EDT (1500 GMT) as stocks rallied to intraday highs, led by gains in the materials and energy sectors.
The American Petroleum Institute, an industry group, said Tuesday that US crude stocks were up 680,000 barrels, far less than the 1.9 million barrel build forecast by a Reuters poll of 12 analysts.
Traders are awaiting Wednesday's more closely watched report from the EIA.
After lighter trading Monday, a bank holiday in the United Kingdom, Brent volumes were up Tuesday at 12 percent higher than the 30-day moving average. US crude volumes were lighter, at 9 percent lower than the 30-day moving average.
CHINA FOCUS
Attention focused again on China, the world's second-largest economy, ahead of preliminary April trade data due on Wednesday.
China's crude oil imports last month were expected to have held near March levels, which were 2.1 percent lower than a year earlier.
Chinese inflation data on Thursday and money supply and loan growth figures expected Friday will also be watched.
<Center><b><i>Copyright AFP (Agence France-Presse), 2013</b></i></center>
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