Oil futures rose on Thursday, with Brent gaining for the fifth straight session, lifted by stronger-than-expected economic data from the United States, a lower outlook for North Sea Brent production and persistent hopes for economic stimulus.
Prices earlier in the day were also supported by worries about Tropical Storm Ernesto, but after it weakened and skirted the coast of the Gulf of Mexico, concerns that the storm would disrupt supply in the region dissipated.
The impact of the storm's weakening was more pronounced on U.S. crude, which turned briefly negative near the close before recovering to end in positive territory. Brent crude kept much of its gains, with worries over North Sea supply remaining supportive, analysts said.
The day's advance followed Wednesday's mixed turnout, when profit-taking ate into the gains that were sparked by a bigger-than-expected drawdown in U.S. crude inventories. Brent rose on the day, while U.S. crude dipped by the close.
In London, Brent crude for September delivery closed $1.08 higher at $113.22 a barrel, the highest settlement for front-month Brent since May 3, after rising to a session high of $113.43.
"The general mood is bullish - any dip is still being used as a buying opportunity," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt.
"Given the supply risk, with falling North Sea output and the closure of three oil ports in Mexico, all this should lend support to prices," he added.
U.S. September crude eked out a 1 cent gain to settle at $93.36.
"Technically, (U.S.) crude oil is bullish short-term," said Rich Alexander, senior broker at Zaner Group in Chicago. Brent's premium against U.S. crude rose to $19.86, the highest since March 9, after closing at $18.79 on Wednesday.
"We still look for the Brent-WTI (spread) to stretch to beyond $20 a barrel, with the Brent side providing virtually all of the impetus in this regard," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
Trading volumes were light, with Brent down 19 percent from its 30-day average and U.S. crude off 12 percent from its 30-day average, according to Reuters data.
POSITIVE, NEGATIVE PRICE FACTORS
New claims for jobless benefits in the United States fell last week, and a separate report showed the trade deficit in June was the smallest in 1-1/2 years.
Those served as hopeful signs for the struggling U.S. economy and could help improve future oil demand, analysts said.
Worries about tighter North Sea output kept Brent supported, with production in September seen down 17 percent due to maintenance at the Buzzard oilfield and natural decline.
Hopes for further monetary easing from China persisted following data showing that annual growth in Chinese factory output slowed in July to its weakest in more than three years while retail sales missed market forecasts.
China's annual consumer inflation rate has fallen to a 30-month low in July, suggesting its central bank has ample scope to ease policy.
In the oil sector, China's refinery throughput inched up 1.1 percent in July, reversing a run of declines for three straight months, but the latest data was the second lowest this year as demand stayed tepid.
A report that top OPEC oil exporter Saudi Arabia trimmed oil production slightly in July was also supportive, some analysts said.
Saudi Arabia pumped 9.8 million barrels per day in July, cutting output 300,000 bpd from June, an industry source said on Thursday.
In the morning trade, there was hesitancy to push prices much higher after the Organization of the Petroleum Exporting Countries gave a downbeat assessment of demand next year.
OPEC said it expected world oil demand to expand by 810,000 barrels per day next year, unchanged from is previous forecast, although the odds suggested demand could undershoot.
The U.S. National Hurricane Center said it expected Tropical Storm Ernesto to further weaken as it moved over mountainous terrain on the Mexican mainland.
There were no reports of disruptions to state-run oil company Pemex's facilities in the south of the Gulf of Mexico. The eye of the storm passed the oilfields of Cantarell and Ku Maloob Zaap, which account for just over half of Mexico's oil production of about 2.5 million bpd.
Three major oil ports -- Coatzacoalcos, Cayo Arcas and Dos Bocas -- remained closed.