LONDON: Oil prices were mixed on Thursday, with the benchmark US crude contract pressured below $75 a barrel by record stockpiles in the US Midwest, while London-Brent crude held above $81 a barrel.
The two-main benchmark contracts have diverged significantly over the past week. Rising global energy demand and hopes Europe’s debt crisis can be tackled have seen Brent rise for four straight days, while US crude prices have been falling since Tuesday.
Stockpiles of crude at Cushing, Oklahoma, the delivery hub for the US contract, have risen for the last eight weeks to stand at a record 37 million barrels, pushing US crude to its steepest discount to Brent since the peak of the economic crisis.
At 1022 GMT on Thursday, US crude oil for delivery in June was trading down 71 cents at $74.94 a barrel, while Brent was trading up 1 cent at $81.21 a barrel.
"In general, Brent is acting as a much better benchmark for global fundamentals at the moment," Barclays Capital analyst Amrita Sen said.
Cushing’s landlocked location means it tends to only reflect the supply and demand situation in the midwestern United States, analysts said.
The US Energy Information Administration (EIA) said total gasoline demand in the United States, which accounts for more than one in ten barrels of global consumption, is up by 2.7 percent on the same four week period last year.
Gasoline inventories in the United States declined by 2.8 million barrels last week, the EIA said on Wednesday, though total US crude inventories were up by 1.9 million barrels.
Prices were supported by firm equity markets in Europe, which rose for the second straight day early in the session after Spain outlined measures to reduce its deficit, including pay and job cuts in the public sector.
The euro zone debt crisis roiled energy markets last week, knocking US crude from a 19-month peak of $87.15 on May 3 to a three-month low of $74.51 just four days later.
"It’s mid-term expectations that have kept prices in a range between $75 and $85," said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan.
The US crude contract for delivery in July is trading almost trading $5 above the current contract, with the premium between the two touching its highest level since February 2009.
Weekly US jobless claims data, out at 1230 GMT, could give the next clue to the pace of the economic recovery, analysts said. –Additional reporting by Alejandro Barbajosa in Singapore.
