NEW YORK (Dow Jones)--Oil futures wobbled Tuesday following tepid U.S. economic data and persistent concerns about tighter crude supplies overseas.
Light, sweet crude for July delivery rose 29 cents, or 0.3%, to $97.59 a barrel on the New York Mercantile Exchange. The contract traded in negative territory earlier in the session.
Brent crude on the ICE futures exchange rose 98 cents, or 0.8%, to $120.08 a barrel.
The divergence between the two benchmark contracts hit a fresh record Tuesday. Brent recently traded at a premium of $22.50 a barrel to the Nymex light, sweet contract.
The two contracts have historically traded within $1 of each other. But the differential has soared to record levels recently, with the Nymex West Texas Intermediate contract pressured by high U.S. oil inventories and the Brent contract plagued by concerns about tightening supplies and a recent bout of unrest in Nigeria.
"It's bordering on ridiculous," said Matt Smith, energy analyst at Summit Energy in Louisville, Ky. "It's really making WTI a little bit irrelevant. That's been affirmed by the action we've seen in gasoline, in heating oil--those are following Brent."
The Nymex contract wavered between positive and negative territory Tuesday after the Commerce Department said U.S. retail and food services sales fell 0.2% last month, the first drop in sales in 11 months. However, the data came in slightly better than expected, with economists surveyed by Dow Jones Newswires calling for a 0.6% drop.
Brent crude futures got a bigger boost from recent reports of production problems of similar-grade crudes. On Monday, Royal Dutch Shell PLC declared force majeure on its Nigerian Bonny Light crude after fires and pipeline leaks blamed on sabotage. The term is used when a company believes conditions beyond its control make it impossible to fulfill a contract.
The leaks affected the 150,000-barrel-a-day Trans Niger Pipeline, the company said. The leaks have been repaired and flows have resumed, but production deferrals forced it to revise June and July loading programs.
Meanwhile, the recent failure of the Organization of Petroleum Exporting Countries to agree on higher production quotas at last week's meeting continues to keep a floor under Brent prices, especially with the continued removal of Libyan oil exports. Market participants will be closely eyeing Saudi Arabia for signs that it is unilaterally raising production to meet what it views as steadily rising oil demand.
Later Tuesday, traders will turn their attention to the first of two reports on U.S. inventory levels. The American Petroleum Institute, an industry group, will publish its survey of U.S. stock levels at 4:30 p.m. EDT. The Department of Energy is due to release its more closely watched survey Wednesday at 10:30 a.m.
Analysts surveyed by Dow Jones Newswires expect the surveys to show oil stocks last week rose, on average, 100,000 barrels. Gasoline stocks are seen rising 300,000 barrels, while inventories of distillates, including heating oil and diesel, are forecast to climb 800,000 barrels.
Front-month July reformulated gasoline blendstock, or RBOB, recently gained 5.22 cents, or 1.7%, to $3.0490 a gallon. July heating oil gained 2.84 cents, or 0.9%, to $3.1342 a gallon.