Brent crude falls

Brent crude turned negative in a bout of late selling on Thursday, dragged down by a sell off in gasoline due to concerns about US demand. Weak gasoline demand, which has been lagging year ago levels by 2.2 percent over the last four weeks in the midst of the summer driving season, pressured gasoline futures for much of the day and helped spark the aggressive sell off in Brent.
Brent, viewed as a better benchmark of market conditions globally and in the giant US Gulf Coast refining region, had been traded up for most of the US trading session on optimism about a possible deal to bail out Greece and news that the world's biggest oil consuming nations would not release more crude.
US crude held on to gains to settle up 73 cents at $99.13 a barrel, after earlier rising above $100 a barrel and breaking out of the $93 and $99 a barrel trading range seen for most of July.
Brent crude fell 64 cents to settle at $117.51 a barrel, while US gasoline futures tumbled 1.36 percent.
Additional pressure came from spread selling between the two futures contracts, with the premium of Brent to US crude narrowing $1.15 to $18.50 a barrel in late activity, traders said. The recent drawdowns in inventories at Cushing, Oklahoma delivery point for the US contract, which last week hit the lowest level since December 24, helped prompt the sell off, according to market participants.
The market shook off early losses caused by weak economic data from China and turned positive as eurozone leaders were set to give their financial rescue fund new powers to help Greece overcome its debt crisis, easing concerns that have weighed on oil and other markets in recent weeks.
"Expectations that the debt problems in Europe could be resolved has sent the euro rallying, weakening the dollar," said Tom Knight, trader at Truman Arnold in Texarkana, Texas. "The stock market is also up on those hopes, also a factor in support of oil's rise today."
Further support came from upbeat data showing factory activity in the US Mid-Atlantic region bounced back in July, as well as news members of the IEA decided against releasing more oil stockpiles despite the threat of high prices to the economic recover. Trading volumes, which have been light all week, were around 50 percent below the 30-day average in early afternoon activity.
Traders have also been eyeing US efforts to avoid a potentially disastrous debt default, with pressure mounting on the White House and Congress to speed efforts to cut a deficit-reduction deal.
The IEA shocked oil markets in June, announcing it would release 60 million barrels of oil to help replace disruptions of Libyan supply and bring down prices. Prices initially plunged, but in the month since the announcement, Brent prices have climbed back more than $10 a barrel.
But on Thursday, the energy watchdog for the industrialised nations confirmed what many analysts had expected, saying not a single one of its 28 members had asked for more oil to be released, including the United States, one of the architects of the first release a month ago.
An IEA official told Reuters the Obama administration had no plans to act unilaterally and release oil from its own reserves, despite ongoing concerns about the impact of high pump price on consumers.
Total US product demand continues to lag year-ago levels, with demand for gasoline down 2.2 percent over the past four weeks - the heart of the summer driving season - compared to the same period in 2010, according to government data.