A rise in gasoline futures helped pull oil prices higher on Friday following news of a unit shutdown at a Canadian East Coast refinery.
Continue Reading Below
While the trading volume for the Brent crude contract was higher, gains on the U.S. futures contract outpaced those for the international benchmark. Brent's premium to WTI narrowed to $4.16 a barrel during the session, after a $3 per barrel spike earlier this week that sent the spread to $6 for the first time since late June.
Brent and U.S. crude found early support from positive U.S. manufacturing data and disruptions of Libyan exports. A short flurry of activity saw volume spike and crude prices jump 80 cents between 10:35 a.m. EDT (1435 GMT) and 10:37 a.m.
Market watchers tied the sudden move to weakness in the dollar after the U.S. Commerce Department reported a bigger-than-expected decline in U.S. new home sales to the lowest in nine months. CME Group said there was nothing unusual or irregular about the trades.
Gasoline prices shot up after energy intelligence provider Genscape reported the shutdown of a 70,000 barrel per day (bpd) fluid catalytic cracking unit at Irving Oil's 300,000 bpd Saint John refinery in New Brunswick.
Irving confirmed the unit had been shut for unplanned maintenance, and trade sources said it could be down for a week.
Continue Reading Below
Further support for gasoline came from news of another shutdown of Monroe Energy's gasoline-making catalytic cracking unit at its 185,000 bpd Trainer, Pennsylvania refinery. The company said later on Friday that the unit will back online within the next 24 to 48 hours.
Brent crude rose $1.14 to settle at $111.04 a barrel, off earlier highs of $111.23 a barrel.
U.S. crude rose $1.39 to $106.42 a barrel, off a session peak of $106.94 and narrowing the contract's discount to Brent to $4.62 a barrel.
Brent trading volumes were 8 percent below their 30-day moving average at just under 500,000 contracts, while U.S. crude was nearly 40 percent below that average at 370,000 contracts.
September U.S. gasoline futures rose 4.24 cents to settle at $3.0072 a gallon. The premium of the September contract to the October contracts, which blew out to 14.08 cents from 12.64 cents on Thursday right after the first reports of the Irving refinery outage, settled at 13.65 cents.
Oil markets have mostly been in a $5 range for the last eight weeks, with Brent swinging between $105 and $110 per barrel since early July and U.S. crude between $103 and $108.
Prices are apt to move from one side to another rapidly the longer the market stays in a range, said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Light trading volume during summer added to the volatility.
"During vacation time when you have light volume, you do get exaggerated price moves. You can push it a lot further a lot faster," he said.
Libya's largest crude oil export terminal, Es Sider, and the oil port of Zueitina remain closed, Deputy Oil Minister Omar Shakmak said, although some improvement was seen at other ports. The outages are the worst disruption of Libya's oil sector since the 2011 civil war.
(Additional reporting by Matthew Robinson in New York, Peg Mackey in London and Florence Tan in Singapore. Editing by Andre Grenon and Peter Galloway)