Brent crude oil fell to a nine-month low near $101 a barrel on Friday as a broad investor sell-off in commodities triggered a fall as much as $3 a barrel, but the global oil benchmark pared losses in afternoon New York trade as bargain hunters emerged.
The cross-commodity rout started in gold on Friday after the precious metal fell below $1,500 an ounce for the first time since July 2011. An unexpected contraction in U.S. retail sales added to pressure on oil, grains and metals as the dollar strengthened, with investors moving into cash.
Brent found some support in the afternoon as traders started buying the global benchmark while selling U.S. crude oil, traders said, on news of a large increase of Canadian crude oil flows into Cushing, Oklahoma, delivery point of the U.S. contract.
In early trade, Brent crude for May delivery fell more than $3 a barrel to hit a $101.09, the lowest prices since July. It recovered by more than $2 by the close, settling at $103.11 a barrel, down $1.16 on the day. Brent has fallen by around 13 percent since February on as uncertainty about the strength of global demand has mounted.
U.S. crude for May delivery lost $2.22 a barrel to settle at $91.29 a barrel, up from an earlier low of $90.27 a barrel. The May contract closed below its 200-day moving average of $91.51 a barrel, a key technical indicator watched by traders.
"There's an underlying anxiety in the crude market about demand growth going forward into the second half of the year," said Andy Lebow, vice president at Jefferies Bache in New York.
"Gold came off and industrials are really getting hit today. That's part and parcel of the anxiety over global demand growth."
The spread between Brent crude and U.S. crude widened to around $12 a barrel Friday afternoon as U.S. crude prices were pressured by reports of increased flows into the U.S. oil contract delivery hub at Cushing, Oklahoma.
Genscape, an independent company that monitors pipelines, said it detected a near-doubling of flows into Cushing on the Steele City leg of the Keystone line to more than 500,000 barrels per day.
Flows on the Keystone line, which carries heavy Canadian crudes from Alberta, normally split at Steele City, Nebraska and then either flow to Cushing or Patoka, Illinois.
Traders said there is a bottleneck at Patoka, however, as Exxon Mobil's near 90,000 bpd Patoka-to-Texas Pegasus pipeline has been shut for two weeks after spilling crude in an Arkansas town.
For the week, Brent lost 1 percent while U.S. crude lost 1.5 percent. U.S. RBOB gasoline futures have lost around 2 percent since Monday to near $2.80 a gallon.
Data from the U.S. Commodity Futures Trading Commission released on Friday showed hedge funds trimmed their bets on higher U.S. crude oil prices by 6,500 futures and options contracts in the week to April 9 to 239,580.
WEAK RETAIL SALES, OIL DEMAND
Oil's price slide was hastened by reports that showed U.S. retail sales contracted in March for the second time in three months and consumer confidence weakened in April, pointing to slowing economic growth in the world's biggest oil consuming nation.
Friday's weak data from the United States followed forecasts for lower global oil demand growth for 2013 released this week by the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC).
World equities prices also retreated, with news that Cyprus would ask for billions more in bailout money adding to pressure.
Geopolitical tensions in the Middle East, with Syria's civil war and no resolution in sight of Iran's dispute over its controversial nuclear program, remain a focus for oil investors.
In Seoul on Friday, U.S. Secretary of State John Kerry warned North Korea it would be a "huge mistake" to test launch a medium-range missile and said the United States would never accept the reclusive country as a nuclear power.
Also demanding investors' attention was a U.S. government agency saying North Korea has a nuclear weapon it can mount on a missile, adding an ominous dimension to threats of war by Pyongyang, but the assessment was swiftly dismissed by several U.S. officials and South Korea. (Additional reporting by Robert Gibbons in New York, Peg Mackey in London and Manash Gaswami in Singapore; Editing by Bob Burgdorfer and Grant McCool)