Brent crude futures fell to near $116 a barrel today, as uncertainty over Greece's ability to resolve its debt problems weighed on sentiment and traders narrowed the benchmark's premium to US crude.
The risk of Europe's debt crisis dragging the region into a recession that could crimp oil demand continued to weigh on risk assets.
Greek political parties will try yet again today to strike a reform deal in return for a new international rescue to avoid a chaotic default.
Front-month Brent fell 21 cents to $116.02 a barrel, snapping seven straight days of gains.US March crude rose 43 cents to $98.84 a barrel, buoyed by an unplanned outage at a Canadian oil sands plant.
Brent's premium to US crude oil narrowed towards $17 a barrel, after the spread had widened to more than $20 per barrel yesterday, its highest since October.
Traders bought the spread, narrowing Brent's premium, after news that a Canadian oil sands plant could be closed for a few weeks and bullish US crude stocks data boosted US crude.
The American Petroleum Institute (API) reported a surprise drawdown of 4.5 million barrels in the week to February 3rd, defying a consensus forecast for an increase of 2.4 million barrels.
The prospect of supply disruptions has put a floor under prices, with Iran's parliament saying yesterday it was ready to impose a ban on oil exports to the EU, while clashes in Nigeria are also worrying investors about potential supply problems.
On the demand side, the US government's Energy Information Administration (EIA) boosted its 2012 and 2013 forecasts for global oil demand growth, and said supply would tighten as gains in non-Opec production lag, adding to support for oil prices.
Reuters
