Brent prices fell 2 percent on Monday pressured by European Central Bank bond-buying, while U.S. crude rose about 1 percent on a smaller-than-expected build in inventories at the key Cushing oil hub, leading to a narrowing gap between the two benchmarks.
Brent's premium to U.S. crude
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Brent was pressured as the ECB started buying bonds under its quantitative easing program, a move that implies a certain level of deflation, said Bob Yawger at Mizuho Securities in New York.
U.S. crude was lifted after data from energy information provider Genscape suggested a smaller inventory build last week, compared with the previous week, at Cushing, Oklahoma, the delivery point for U.S. futures.
Genscape estimated a 157,000-barrel rise in Cushing last week, traders said, versus 536,000 barrels noted by the Energy Information Administration during the week ended Feb. 27.
"The perception is that the number will be smaller than it has been in the last week, and several weeks before that, particularly the number at Cushing won't be one of these mega-builds," Yawger said.
Traders said a U.S. executive order against OPEC member Venezuela and sanctions against certain individuals in that country also had a negative effect on Brent, although a senior Obama administration official said the order does not target the Venezuelan oil industry.
"On the face of it, this executive order should have been bullish if anything to oil, if it impedes oil moving of Venezuela in any way," said Phil Flynn, analyst at Price Futures Group in Chicago. "But Venezuela is such a basket case that people tend to worry about so many other things concerning that country, and that's possibly what caused the market to go down."
U.S. crude imports from Venezuela have averaged 728,000 barrels per day since the start of last year, down from 738,000 bpd in 2013 and 890,000 bpd in 2012.
(By Barani Krishnan; Additional reporting by Christopher Johnson in London and Keith Wallis in Singapore; Editing by Jason Neely, William Hardy, David Evans, Tom Brown, Peter Galloway and Marguerita Choy)