Brent pares gains

Brent crude oil futures gave back most early gains on Wednesday, as weak US economic data stoked fresh oil demand worries. Brent rose in early trade bouncing back from a recent price slump, as investors grew less worried about the euro zone on news of strong investor demand for Spanish bonds. But despite solid demand for the bonds, investors remained sceptical about Spain's fiscal outlook.
US crude futures fell after economic data showed US jobless claims dipped less than expected, while existing home sales fell unexpectedly and mid-Atlantic factory activity slipped. "The jobless claims numbers as well as housing sales data were not supportive, adding to yesterday's bearish data on the US crude stock build," said Kyle Cooper, managing partner at IAF Advisors in Houston, Texas.
Brent June crude edged up 3 cents, or 0.03 percent, to settle at $118 a barrel, after trading from $117.68 to $119.15. Brent jumped early to a session high of $119.15. On Wednesday, it dropped as low as $116.70, the lowest intraday price for front-month Brent since Feb. 10.
US May crude, which expires on Friday, was down 6 cents at $102.61, after falling to a session low of $102.03, just above the 100-day moving average at $101.93. The more actively traded US June crude was down 8 cents at $103.04. "I see the current US crude price range moving at $10 on either side of $100 and the market is waiting for any break in developments over Iran's talks with world powers or other news that could affect the oil markets strongly," Cooper said.
June Brent's premium against the US June crude contract climbed slightly above $15, after closing at $14.85 on Wednesday. US crude inventories fell last week for the fourth straight week, government data showed on Wednesday. That offset supply concerns due to a series of disruptions across the globe this year, as well as worries about the potential loss of oil from Iran due to EU and US sanctions against Iran set to take effect this summer.
US crude remained under pressure from gasoline, which fell nearly 2 percent even though Wednesday's inventory report showed a larger-than-expected drawdown. "US crude has been moving slightly on either side of unchanged for a while here, but there are signs that with gasoline having hit February lows yesterday and with heating oil toppy, crude may be dragged lower," said Rich Alexander, senior broker at the Zaner Group in Chicago.
Oil markets track the economic winds in the euro zone, which have a major impact on oil demand. The global economy is set to expand by a modest 3.3 percent this year as a still-smouldering euro zone debt crisis and a relatively slow US recovery continue to leave Asiua as the main driver for Growth, Reuters polls showed on Thursday.
Oil investors are awaiting next week's meeting of US Federal Reserve policymakers, which will be closely scrutinised for any hints of a third round of monetary easing, which could have an impact on oil prices. Initial claims for US state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labour Department said. The prior week's data was revised to show 8,000 more applications received than previously reported. Other data showed factory activity in the Mid-Atlantic region slowed sharply this month and home resales dropped for a second straight month in March.