Crude oil futures edge higher; WTI-Brent spread in focus

Investing.com - Crude oil futures edged higher on Monday, as a broadly weaker U.S. dollar and indications of improving demand from the U.S. supported prices.

On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD108.20 a barrel during European morning trade, up 0.3% on the day.

New York-traded oil prices held in a range between USD107.91 a barrel, the daily low and a session high of USD108.45 a barrel.

New York-traded oil prices rose to USD108.92 a barrel on Friday, the strongest level since March 3, 2012.

Nymex oil futures advanced 2.1% last week, the fourth consecutive weekly gain. The U.S. benchmark has rallied nearly 14% over the past four weeks.

A broadly weaker U.S. dollar contributed to gains on Monday, as fears of an imminent winding down of the Federal Reserve's monetary easing program abated for now.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.2% to trade at 82.53, the lowest level since July 17.

Fed Chairman Ben Bernanke said last week that the pace of the central bank’s bond purchases are not a “preset course”. The Fed chief reiterated that the central bank will continue to maintain its accommodative monetary policy for the foreseeable future.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Indications of improving demand from the U.S. also supported prices. Crude supplies in the U.S. are down 27.1 million barrels in three weeks ended July 12, the most in weekly statistics dating back to 1982.

The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery eased up 0.25% to trade at USD108.34 a barrel, with the spread between the Brent and crude contracts standing at USD0.14 a barrel.

U.S. crude for September delivery reached a USD0.05 premium over Brent on Friday for the first time since August 2010.

As recently as February of this year, London-traded Brent was at a USD23 premium over U.S. crude.

The gap between the contracts has been on a downward trend in recent months, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.

Stocks at Cushing have fallen to 46.1 million barrels, the lowest level since November.