Oil rose for a third straight session on Friday, supported by a raft of strong economic data from top oil consumer the United States that also boosted U.S. equities, even as the dollar hit a multi-year high.
The Conference Board's Leading Economic Index, a gauge of future U.S. economic activity, rose in April to its highest level in nearly five years, and U.S. consumer sentiment rebounded in early May to the highest level in nearly six years.
U.S. stocks continued their climb into uncharted territory on Friday, racking up the fourth week of gains in a row as both the Dow and the S&P 500 finished Friday's session at record highs.
"Everyone's feeling buoyant, and we got a nice little bounce on the S&P 500," said Phil Flynn, energy analyst at Price Futures Group in Chicago.
Brent crude settled up 86 cents at $104.64 a barrel, after an earlier rise of more than $1.
U.S. oil rose 86 cents to settle at $96.02, its third straight rise. U.S. crude has swung between $97 a barrel on May 6 and $92 a barrel on May 15.
The spread between July Brent crude and U.S. crude traded between $8 and $9 on Friday, closing at $8.62. On Tuesday, it narrowed to $7.20, which was the lowest since the end of 2011. Since then it has widened past $10 before easing back on Friday.
At 10:30 a.m. EDT (1430 GMT), energy industry intelligence provider Genscape reported the 400,000-barrel per day Seaway pipeline was shut down, sending Brent and U.S. crude prices down nearly $1 by 11:20 a.m. (1520 GMT). Seaway carries crude oil from Cushing, Oklahoma, to Freeport, Texas.
Enterprise Product Partners LP, Seaway's owner, said the pipeline was operating normally. Genscape reported an increased flow to near 110,000 bpd on Friday afternoon.
U.S. gasoline has risen for nine out of 12 sessions, including the last three, despite a Wednesday report showing an unexpected year-on-year build in gasoline inventories ahead of the summer driving season.
The dollar index hit a nearly three-year high, making dollar-denominated commodities more expensive for holders of other currencies.
Jim Ritterbusch, president of Ritterbusch Associates in Galena, Illinois, wrote in a research note that the U.S. gasoline price strength was related to "a last minute influx of seasonally motivated speculative capital that has been accentuated by five-week highs in nearby futures."
Timothy Evans, energy specialist at Citi Futures Perspective, warned of a mismatch between underlying supply and demand dynamics and Friday's positive market sentiment.
"We have this tension in the market between the optimism evident in the push higher in prices, versus the cold reality of the inventory numbers and the demand figures," Evans said.
Money managers cut their net long U.S. crude futures and options positions in the week to May 14, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
The speculator group cut its combined futures and options position in New York and London by 5,281 contracts to 249,136 during the period.
(Additional reporting by Alex Lawler in London; Editing by David Gregorio and Marguerita Choy)