U.S. crude oil rose on Monday backed by strong U.S. economic data, while Brent edged up after nearing a two-year low last week.
With U.S. refinery maintenance season around the corner, analysts said, prices for U.S. crude, or West Texas Intermediate (WTI), may come under pressure. Gasoline prices have risen around 6 percent in the last two weeks because of refinery maintenance shutdowns, and strength in gasoline has supported crude prices.
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"I think demand by U.S. refiners to make product to export is definitely supporting WTI prices," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. "Looking overseas, reports that Libya's production has climbed back ... means we don't have supply disruptions."
U.S. crude for November delivery rose $1.03 to settle at $94.57 while Brent rose 20 cents to settle at $97.20 a barrel.
The U.S. crude contract saw a slight bump in the afternoon after data showed seasonal refinery maintenance on the U.S. Gulf Coast will peak next month at some 500,000 barrels per day, while crude unit outages will ease quickly in November, according to IIR data.
U.S. crude futures traded up some 26 cents over the next half hour on news that refinery maintenance was set to shut 720,000 bpd of crude unit capacity in October vs the 901,000 bpd five-year average.
Meanwhile, Brent's premium over WTI <CL-LCO1=R> narrowed to the smallest in 12 months, touching $2.57 a barrel, before widening to $2.63 a barrel.
Analysts and traders said that when maintenance season pressures U.S. crude prices, there will be an opportunity for a wider arbitrage.
"The equity market was so beat down this morning, so I think the strength in oil is following the surge back," said Phillip Streible, senior market strategist at RJO Futures in Chicago. "I don't think we're going to see much more of a narrowing in positions (WTI vs Brent). I think traders will be looking for an opportunity to sell WTI."
Overseas, Chinese industrial profits fell 0.6 percent in August from a year earlier, a reversal from July's 13.5 percent rise. The country, the world's No. 2 economy, has also had problems with unsteady exports, a housing downturn and cooling investment growth.
Iran has urged OPEC members to make coordinated efforts to help stem the decline in oil, but that has highlighted a split with others in the oil producers' group such as Saudi Arabia, which is playing down the price drop.
Providing some support, a strike has trimmed Libya's oil output by 25,000 barrels a day to 900,000 bpd, a spokesman for state-run National Oil Corp (NOC) said on Sunday, but production is still up from a low of 200,000 bpd earlier in the year.
In early trade, the dollar hit a four-year peak against a basket of currencies, pressuring oil by making commodities priced in greenbacks more expensive for buyers using other currencies.
Analysts said that Brent may have more room to fall, particularly as the U.S. dollar looks to strengthen ahead.
"There's a feeling that if you wait, the dollar will get stronger," said Walter Zimmerman, chief technical analyst at United-ICAP. "That's real negative for Brent crude."
(By Catherine Ngai; Additional reporting by David Sheppard and Sam Wilkin in London, James Topham in Tokyo; Editing by Michael Urquhart, David Evans and Steve Orlofsky)