Brent held above $108 a barrel on Monday while US oil futures declined as traders made use of the last day to buy the August contract.
The contrast meant the resumption of the more common spread between the two benchmarks after West Texas Intermediate reached parity with Brent on Friday for the first time in three years and continued to trade above it earlier on Monday.
Brent rose 31 cents to $108.38 a barrel by 1407 GMT, while WTI fell 15 cents to $107.90 after hitting a 16-month high of $109.32 on Friday.
Traders said WTI had reversed its earlier gains after the opening of trade in the US as investors rolled into next month’s contract ahead of the August contract expiry later in the day.
“The market leadership is back with WTI. We’re seeing that in volumes traded and open interest that is increasing in WTI,” said Olivier Jakob, analyst at Petromatrix.
Hedge funds amassed record bets on rising US crude oil prices in the week to 16 July, trade data by the US Commodity Futures Trading Commission, CFTC. showed.
The convergence of the two front-month benchmarks comes as increased pipeline capacity has drained the glut of oil at the WTI delivery point of Cushing, Oklahoma, to the US Gulf Coast, where refinery demand has been high. Stocks at Cushing have fallen to 46 million barrels from 52 million in January.
The strong backwardation between the September and October WTI contracts, when the front month price is higher than the next one, has been the main driver in the contract’s recent rally, according to Jakob.
The WTI September/October spread was at around $1.80, with the August contract expiring later on Monday. Prior to Friday, it had last traded above Brent in October 2010.
“The extraordinarily strong backwardation is strengthening and bringing everyone into the WTI,” Jakob said.
The easing of the Cushing glut has nevertheless not led to lower prices at the US Gulf Coast as refineries there are eager to cash in on robust margins and exports.
At the same time, the global benchmark Brent could find support from a stronger demand growth outlook and supply risks in the Middle East and Sudan, according to Carsten Fritsch, analyst at Commerzbank.
A pledge by the Group of 20 nations, which account for 90% of the world economy, to put growth before austerity has fuelled hopes of a recovery in the consumption of commodities.
Speculators increased net long positions in Brent crude oil futures in the week to 16 July, data from the IntercontinentalExchange, ICE, showed on Monday.