LONDON: New York crude oil traded above Brent prices for the first time since August 2010 on Friday, driven by a brighter US economic outlook and falling American crude stockpiles.
New York's main contract, West Texas Intermediate (WTI) for delivery in August, hit $109.04 a barrel, above Brent which was trading at $108.99 in London afternoon deals.
New York crude was also trading at 16-month highs.
"Better-than-expected US economic data are providing the WTI price with upward momentum and so is the sharp reduction of US crude oil stocks in past weeks," said Commerzbank analyst Carsten Fritsch.
The big jump in New York crude accompanied similar gains for share prices on Wall Street after a sharper-than-expected drop in US jobless claims and an unexpected spike in regional manufacturing activity.
Brent oil prices have historically traded below WTI crude but over the past three years have stayed above the US contract, largely owing to high US stockpiles according to analysts.
In October 2011, Brent traded almost $28 above WTI.
"The WTI has been reconnected to the world oil market through a change of pipeline logistics and increasing refinery demand," said Andy Lipow of Lipow Oil Associates.
"The WTI was undervalued because there was a logistic bottleneck that prevented it from getting to the Gold Coast refining sectors, which meant that the alternative to pipeline was rail, which is far more expensive."
Markets have been supported also by this week's assurances from Federal Reserve chief Ben Bernanke that the bank's $85 billion-a-month bond-buying scheme would be kept in place as long as the world's biggest economy needed it.
The official crude inventories report by the US Department of Energy on Wednesday showed supplies in the United States fell by 6.9 million barrels in the week to July 12.
The drop, which comes during the summer driving season when Americans take to the roads for their holidays, beat the 2.2 million barrels estimated by analysts.
Analysts said oil prices would remain supported by signs of stronger demand in the US, the world's top crude consumer, as well as fears of a disruption in Middle East supply caused by Egypt's political turmoil.
Oil prices have risen this week, also despite weak economic data out of China, the world's biggest consumer of energy.
China reported that economic growth slowed to a 7.5-percent pace in the April-June quarter, down from 7.7 percent in the previous three months.
The slower growth rate came in as expected, which analysts said might explain the lack of impact on the market.
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