SINGAPORE: Brent crude stayed above $93 a barrel on Thursday after rallying on an output cut by Norway and upbeat US economic data, although gains were checked by expectations that an EU summit was unlikely to produce concrete measures to contain the region's debt crisis.
EU leaders will start a two-day meeting in Brussels openly divided on Thursday, with German Chancellor Angela Merkel pitting herself against France and Italy, insisting that they put the bloc's fundamental problems ahead of pleas for emergency action.
Brent crude was down 8 cents at $93.42 per barrel by 0629 GMT, after settling at $93.50 on Wednesday, the highest in just over a week.
US crude is up for a third day at $80.56, 35 cents higher than the previous day's close.
"Over the next few months, we do see higher prices, but that's on the basis that Europe doesn't take a turn for the worst," said Jeremy Friesen, a Hong Kong-based commodity strategist at Societe Generale. "We could see the rally extending if investors see the EU meeting as constructive."
Positive economic data from the United States buoyed global markets ahead of the EU summit. Demand for long-lasting US manufactured goods rebounded while a gauge of business spending plans rose. But slowing global growth suggests the momentum might not be sustained.
"You can be bullish about the United States but your bullishness won't last until Europe recovers. It's the same for China," Friesen said.
US crude oil stocks fell slightly last week on a dip in crude imports and increased refining rates, while fuel stockpiles were mixed as gasoline inventories rose and distillates fell, government data showed.
SUPPLY
Brent's rally this week was partly due to supply disruptions in Norway, the world's eighth-largest oil exporter, analysts said.
Oil production in Norway is down by about 240,000 barrels of oil per day, or 15 percent of capacity, due to an oil workers' strike, a local industry association said, although the country's labour minister said the government was far from intervening.
Investors are also keeping a close watch on the impact of Western sanctions on Iranian crude supply as deadlines loom.
"The Iran story is far from over," Jason Schenker, president of Prestige Economics in Austin, Texas, wrote in a note.
A full EU embargo on Iranian crude on July 1 could be bullish for oil as it created some short-term disruptions in global oil markets, he said.
"This situation could also easily bring geopolitical risks with Iran back to the front pages."
OPEC's second-largest producer, Iran, acknowledged for the first time on Wednesday that its oil exports had fallen sharply, down 20 to 30 percent from normal volumes of 2.2 million barrels daily.
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