Industry Execs See Higher Costs, Improved Safety with New Regulations

Oil and gas companies will face a tougher regulatory regime in the United States as the U.S. government introduces new rules over the next two years to improve industry safety  following the 2010 Deepwater Horizon incident, according to the findings of a recent survey by GL Noble Denton.

The independent industry technical provider's new report "Reinventing Regulation: The impact of U.S. reform on the oil and gas industry" includes data gathered from over 100 senior oil and gas professionals and in-depth interviews with 10 industry executives, analysts and academics.

Eighty-five percent of survey respondents told GL Noble Denton they expected the U.S. regulatory regime to become much tougher over the next two years. Sixty-one percent said they believed the changing regime would have a somewhat or highly negative effect on their business during the next two years.

Operators face new regulations such as being able to demonstrate they are prepared to deal with a blowout and worst-case discharge. At the same time, they are being forced to revise their approaches to issues such as well design, workplace safety and corporate accountability.

As a result, the oil and gas professionals surveyed anticipate greater administrative workloads and higher compliance costs. Seventy-eight percent expect regulatory changes will lead to greater administrative workload, while 82 percent expected compliance costs to increase. Fifty-seven percent expect the changes to impact their appetite for risk-taking.

A strong regulatory reaction is inevitable following an event such as Macondo and incidents such as Piper Alpha, a North Sea production platform that exploded in 1988, killing 167 men, said Arthur Stoddart, GL Noble Denton's executive vice president for the Americas, in an interview with Rigzone.

“No government could fail to act in the wake of such an incident. The regulations being implemented in the United States present new challenges for oil and gas operators in terms of rising costs and workloads, but these charges are absolutely necessary to improve safety and prevent a future oil spill,” Stoddart said in a statement.

Smaller oil and gas companies are the most likely to face the brunt of increasing compliance costs, burgeoning legal risks and a greater administrative workload. With the U.S. regulatory environment expected to become more stringent over the next two years, oil and gas professionals surveyed anticipate a rise in mergers and acquisitions among oil and gas operators as growing compliance costs speeds up consolidation.

The report, the third by GL Noble Denton which measures industry sentiment, didn't get into specifics on the exact increase of compliance costs, although one executive interviewed anticipated a 10 to 20 percent cost increase. The exact cost may be harder to quantify -  longer times for obtaining drilling permits are expected, which can add to cost. Higher insurance costs also are expected. An operator may experience higher costs if they have to keep a rig longer due to an inspection interrupting drilling. But in other cases, they may not incur any additional cost due to downtime that would have occurred anyway.

While 76 percent of those surveyed prefer a performance or goal-oriented approach to compliance versus the prescriptive approach taken by the U.S. government, these professionals also believe the United States will remain a major destination for oil and gas investment. However, oil and gas industry executives surveyed believe that new safety regulations will improve safety and restore confidence in the industry, the survey found.

Nearly half the executives surveyed expect the new regime to boost safety in the industry. However, only one in 10 of the survey respondents believe the U.S. government is taking the right approach to preparing the oil for new regulations.

While operators have until 2014 to adjust to the new SEMS II regulations, they must still meet inspection requirements under SEMS I by the Nov. 15 deadline. However, GL Noble Denton found the respondents felt their companies were highly or somewhat prepared to meet the new standards.

“There was a bit of a feeling that the authorities could have been clearer, but overall they felt prepared,” said Stoddart.

The impact of new post-Macondo regulations will not only be felt by the U.S.-based oil and gas industry, but regulatory regimes worldwide as countries with existing and emerging oil and gas industries look at the United States and ask them whether they are doing enough, Stoddart told Rigzone.

"It's common for countries to look to mature markets for guidance on rules," Stoddart noted, adding that the UK looked to Texas in the 1970s when North Sea oil and gas exploration began to increase.

While countries may not necessarily being adding specific new rules, the global oil and gas industry is reacting to the changes in the United States by making these new standards global, and using them as a competitive advantage, Stoddart noted.

The UK utilized a prescriptive approach to oil and gas regulations until the Piper Alpha incident in 1988. Like the United States, the UK responded to the incident with significant regulatory changes, including a separation of the management of health, safety and environment issues and production revenues.

The UK also adopted a goal-oriented approach to safety, in which the operator must demonstrate they are meeting their goal of safe, responsible production, but are not told specifically how to meet this goal, said Stoddart, who sees countries with emerging oil and gas industries more likely to adopt a goal-oriented safety regime. GL Noble Denton officials also believe a goal-oriented approach can accommodate changes in technology more easily than a prescriptive approach.

The shortage of skilled technical workers in the industry topped the list of concerns among oil and gas professionals for the first time in the study's three-year history. While skills shortage ranked among the top five concerns, the shortage is now viewed as the biggest barrier to oil and gas industry growth, and the higher competency requirements will exacerbate the shortage.

Both government regulatory agencies and operators are competing to hire technical inspectors from the same limited pool of qualified candidates. GL Noble Denton officials see this trend occurring not only in the United States, but in the UK as well. With oil and gas companies able to pay more than government agencies, the top flier candidates typically get hired by operators, Stoddart noted.

Technical inspectors come from a variety of backgrounds, but are mainly engineers. The shortage of college graduates in engineering and science, technology, engineering and mathematics degrees becoming technical inspectors exacerbating the shortage of workers with this skill set.

The shortage of qualified inspectors is also made worse by the fact that only the most experienced and technically qualified candidates are sought out. Typically, people learn to operate at the edge of their experience, but the new rules prevent that, Stoddart noted. 

Inspectors now have to demonstrate they are fully qualified to perform a job before they are given responsibility. However, they can't get the experience they need unless they are given the chance to actually do the job. The trend of not handing over responsibility unless it's certain a worker can perform a job will limit learning through projects.

The increased liability associated with deepwater projects might be playing a role in why operators are seeking to expand their portfolios to U.S. onshore plays. While there are still risks associated with onshore, Stoddart said the risks are not as likely to damage a company the way that a major incident like Macondo could. Offshore projects are competing with onshore projects not only for capital but for talent as well.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Nymex Crude Settles $1.62 Higher at $95.61/Bbl

Crude-oil futures rose 1.7% Friday to a one-month high as monthly jobs data showed hiring picked up in April, offering a hopeful sign for the broader economy.

The U.S. added 165,000 jobs last month, according to the Labor Department, above economists' average estimate of a 148,000 increase. The unemployment rate fell to 7.5% from 7.6%.

For energy traders, the jobs report boosted expectations that demand for gasoline and other fuels will start to pick up as the economy improves.

"With stronger jobs numbers, oil demand should be on its way," said Carl Larry, head of oil-trading newsletter Oil Outlooks and Opinions.

U.S. oil stockpiles rose to the highest level in at least three decades last week, while gasoline supplies in the high-demand Northeast U.S. are 11% above average for this time of year. If the economy picks up steam, those high levels of supplies could begin to fall.

"This puts us back on track for a much stronger economy, and in terms of energy demand, it bodes well for gasoline," said John Kilduff, founding partner of New York hedge fund Again Capital. "No matter how expensive gasoline gets, people will pay for it to drive to their job."

Light, sweet crude for June delivery settled $1.62 higher at $95.61 a barrel on the New York Mercantile Exchange, after trading as high as $96.04 a barrel earlier in the session.

Brent crude on the ICE Futures Exchange was $1.34 higher at $104.19 a barrel.

Nymex gasoline futures for June delivery settled 4.48 cents, or 1.6%, higher at $2.8254 a gallon.

The gains in oil follow a sharp rally in the previous session, when Nymex crude futures jumped 3.3%, reversing losses from earlier in the week.

Broader markets also moved higher following the jobs data, with the Dow Jones Industrial Average recently up 0.9%. Copper futures surged 6.8% to $3.3145 a pound.

Both Nymex crude and its European counterpart, Brent, have been sensitive this week to economic indicators, including disappointing data on the U.S. and Chinese economies. But on Thursday, the European Central Bank's decision to cut interest rates prompted a rally in equity markets that spilled over into the crude-oil market.

But despite Friday's gains, many analysts and traders say that the oil market remains well-supplied, which could cap any sustained price gains. And higher stockpiles in the U.S., due in part to surging domestic production, come as some overseas producers are keeping output strong.

The presidents of Sudan and South Sudan will be in place to watch the first shipment of crude oil from the south through Sudan's Port Sudan in the next few days, after a more than 15-month halt kept the countries' 350,000 barrels a day of production off the market.

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Nymex Crude Settles $1.62 Higher at $95.61/Bbl

Crude-oil futures rose 1.7% Friday to a one-month high as monthly jobs data showed hiring picked up in April, offering a hopeful sign for the broader economy.

The U.S. added 165,000 jobs last month, according to the Labor Department, above economists' average estimate of a 148,000 increase. The unemployment rate fell to 7.5% from 7.6%.

For energy traders, the jobs report boosted expectations that demand for gasoline and other fuels will start to pick up as the economy improves.

"With stronger jobs numbers, oil demand should be on its way," said Carl Larry, head of oil-trading newsletter Oil Outlooks and Opinions.

U.S. oil stockpiles rose to the highest level in at least three decades last week, while gasoline supplies in the high-demand Northeast U.S. are 11% above average for this time of year. If the economy picks up steam, those high levels of supplies could begin to fall.

"This puts us back on track for a much stronger economy, and in terms of energy demand, it bodes well for gasoline," said John Kilduff, founding partner of New York hedge fund Again Capital. "No matter how expensive gasoline gets, people will pay for it to drive to their job."

Light, sweet crude for June delivery settled $1.62 higher at $95.61 a barrel on the New York Mercantile Exchange, after trading as high as $96.04 a barrel earlier in the session.

Brent crude on the ICE Futures Exchange was $1.34 higher at $104.19 a barrel.

Nymex gasoline futures for June delivery settled 4.48 cents, or 1.6%, higher at $2.8254 a gallon.

The gains in oil follow a sharp rally in the previous session, when Nymex crude futures jumped 3.3%, reversing losses from earlier in the week.

Broader markets also moved higher following the jobs data, with the Dow Jones Industrial Average recently up 0.9%. Copper futures surged 6.8% to $3.3145 a pound.

Both Nymex crude and its European counterpart, Brent, have been sensitive this week to economic indicators, including disappointing data on the U.S. and Chinese economies. But on Thursday, the European Central Bank's decision to cut interest rates prompted a rally in equity markets that spilled over into the crude-oil market.

But despite Friday's gains, many analysts and traders say that the oil market remains well-supplied, which could cap any sustained price gains. And higher stockpiles in the U.S., due in part to surging domestic production, come as some overseas producers are keeping output strong.

The presidents of Sudan and South Sudan will be in place to watch the first shipment of crude oil from the south through Sudan's Port Sudan in the next few days, after a more than 15-month halt kept the countries' 350,000 barrels a day of production off the market.

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Noble Energy 1Q Net Down 0.8% on Higher Costs

Noble Energy Inc.'s first-quarter earnings fell 0.8% as the oil-and-gas explorer's higher expenses counterbalanced stronger revenue from oil and condensates, as well as natural gas.

The company has been selling its noncore assets to focus its spending on higher-return areas, including horizontal drilling operations in the U.S. and offshore projects in the Gulf of Mexico, the Mediterranean, and West Africa.

Noble late last year said it would bump up capital spending by 11% in 2013 to $3.9 billion, and said its oil and gas output would grow at a compounded annual growth rate of 17%. About 60% of the capital expenditures were allocated for U.S. onshore projects, while 10% of the capital budget was targeted for its operations in the Eastern Mediterranean region.

Noble Energy reported a profit of $261 million, or $1.45 a share, down from $263 million, or $1.47 a share, a year earlier. Excluding hedging impacts and other items, earnings were down at $1.48 from $1.65.

Revenue rose 5.1% to $1.14 billion amid higher oil and natural-gas revenue.

Analysts polled by Thomson Reuters most recently projected earnings of $1.24 on revenue of $1.08 billion.

Average sales volumes from continuing operations rose to 245,000 barrels of oil equivalent a day, from 236,000 Boe/d. Average crude and condensate realized prices were down 8.2% and natural-gas realized prices rose 20%.

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Crude Oil Settles Higher on Bargain Buying after Recent Sharp Drop

Crude-oil futures prices settled higher Thursday amid bargain-hunting after a recent steep selloff, with North Sea Brent posting its first gain after six down days.

News of lower exports of Nigerian crude oil buoyed prices of European benchmark Brent crude, which had tumbled in the past six session to its lowest level since July 2. Royal Dutch Shell's (RDSA, RDSA.LN) Nigerian unit said it cut output of Bonny Light crude oil by 150,000 barrels a day and halted exports in order to resolve issues with a key oil pipeline.

Traders said an extended outage in shipments of the Brent lookalike would underpin prices of the European benchmark. But the overall supply-demand picture for oil remains weak, amid stuttering signs of economy recovery in the U.S., the world's biggest oil consumer.

"We are a slave to the economy right now and the picture's not particularly great," said Carl Larry, analyst at Oil Outlooks and Opinions.

June North Sea Brent crude oil futures on the InterContinental Exchange settled 1.5%, or $1.44, higher at $99.13 a barrel, after six days of declines. The June contract traded in a high-low range of near $10 a barrel since April 10, dropping 8%, or nearly $8.50 a barrel in the period.

May-delivery light, sweet crude oil futures on the New York Mercantile Exchange settled 1.2%, or $1.01 higher, at $88.20 a barrel, after settling Wednesday at a four-month low.

U.S. benchmark crude has dropped by more than $10 a barrel from highs in early April, as domestic crude oil and gasoline inventories have climbed, while demand for fuels remains sluggish. Front-month Brent, has fallen by about $12 a barrel this month, and the three-day string of prices below $100 a barrel is the longest since June 2012.

"We've lopped off $12 and it looks like we're wrapping up the selloff and starting to stabilize here," said Gene McGillian, broker and analyst at Tradition Energy. "But it's not that all of sudden we have confidence that the economy is improving."

The Labor Department said Thursday the number of U.S. workers applying for jobless benefits last week rose by more than economists had expected. Elsewhere, the Conference Board said its index of leading economic indicators posted an unexpected fall in March, as consumers turned gloomy on the economic outlook. The index declined 0.1% in March, its first fall since August, and counter to an expected 0.2% rise recorded in a survey of economists by Dow Jones Newswires.

U.S. gasoline demand dropped to a one-month low and was the lowest for the second week in April in 16 years, government data released on Thursday show. Demand of 8.383 million barrels a day last week was nearly 400,000 barrels a day below the year-earlier level.

The Energy Information Administration forecasted last week that gains in fuel-efficient vehicles will trim spring-summer driving season demand this year to a 12-year low of 8.877 million barrels a day.

Nymex May reformulated gasoline blendstock futures posted the first gain after falling 12%, or 37.25 cents in five of the previous six sessions to a three-month low. The contract settled up 2.65 cents, or 1%, Thursday, at $2.7555 a gallon.

Nymex May heating oil futures settled 4.45 cents, or 1.6%, higher, at $2.7791 a gallon. Prices fell 7.7% over the previous six days to the lowest level since July 2012.

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Crude Oil Settles Higher on Bargain Buying after Recent Sharp Drop

Crude-oil futures prices settled higher Thursday amid bargain-hunting after a recent steep selloff, with North Sea Brent posting its first gain after six down days.

News of lower exports of Nigerian crude oil buoyed prices of European benchmark Brent crude, which had tumbled in the past six session to its lowest level since July 2. Royal Dutch Shell's (RDSA, RDSA.LN) Nigerian unit said it cut output of Bonny Light crude oil by 150,000 barrels a day and halted exports in order to resolve issues with a key oil pipeline.

Traders said an extended outage in shipments of the Brent lookalike would underpin prices of the European benchmark. But the overall supply-demand picture for oil remains weak, amid stuttering signs of economy recovery in the U.S., the world's biggest oil consumer.

"We are a slave to the economy right now and the picture's not particularly great," said Carl Larry, analyst at Oil Outlooks and Opinions.

June North Sea Brent crude oil futures on the InterContinental Exchange settled 1.5%, or $1.44, higher at $99.13 a barrel, after six days of declines. The June contract traded in a high-low range of near $10 a barrel since April 10, dropping 8%, or nearly $8.50 a barrel in the period.

May-delivery light, sweet crude oil futures on the New York Mercantile Exchange settled 1.2%, or $1.01 higher, at $88.20 a barrel, after settling Wednesday at a four-month low.

U.S. benchmark crude has dropped by more than $10 a barrel from highs in early April, as domestic crude oil and gasoline inventories have climbed, while demand for fuels remains sluggish. Front-month Brent, has fallen by about $12 a barrel this month, and the three-day string of prices below $100 a barrel is the longest since June 2012.

"We've lopped off $12 and it looks like we're wrapping up the selloff and starting to stabilize here," said Gene McGillian, broker and analyst at Tradition Energy. "But it's not that all of sudden we have confidence that the economy is improving."

The Labor Department said Thursday the number of U.S. workers applying for jobless benefits last week rose by more than economists had expected. Elsewhere, the Conference Board said its index of leading economic indicators posted an unexpected fall in March, as consumers turned gloomy on the economic outlook. The index declined 0.1% in March, its first fall since August, and counter to an expected 0.2% rise recorded in a survey of economists by Dow Jones Newswires.

U.S. gasoline demand dropped to a one-month low and was the lowest for the second week in April in 16 years, government data released on Thursday show. Demand of 8.383 million barrels a day last week was nearly 400,000 barrels a day below the year-earlier level.

The Energy Information Administration forecasted last week that gains in fuel-efficient vehicles will trim spring-summer driving season demand this year to a 12-year low of 8.877 million barrels a day.

Nymex May reformulated gasoline blendstock futures posted the first gain after falling 12%, or 37.25 cents in five of the previous six sessions to a three-month low. The contract settled up 2.65 cents, or 1%, Thursday, at $2.7555 a gallon.

Nymex May heating oil futures settled 4.45 cents, or 1.6%, higher, at $2.7791 a gallon. Prices fell 7.7% over the previous six days to the lowest level since July 2012.

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Oil Futures Finish Higher as S&P 500 Aims for Record

Oil futures finished higher Thursday, setting a six-week high as the Standard & Poor's 500 was poised to finish at a record.

Light, sweet crude for May delivery settled 65 cents, or 0.7%, higher, at $97.23 a barrel on the New York Mercantile Exchange. That's the highest settlement since Feb. 14.

Brent crude on the ICE futures exchange settled 33 cents, or 0.3% higher, at $110.02 a barrel.

Futures rallied as the benchmark S&P 500 pushed higher and was set to surpass its previous record set in October 2007. The index recently rose 0.3%, to 1567.08.

"The stock-market record for the S&P is chipping in here," said John Kilduff, founding partner at Again Capital in New York. "It's a risk-on day."

Oil futures and equities often trade in tandem since both are considered risky assets that investors use as a bet on economic growth. In addition, crude traders often turn to equities as a barometer of broader economic sentiment.

Despite Thursday's strong stock market performance, several reports put a damper on the crude market earlier in the session, keeping it in negative territory for much of the morning.

Jobless claims rose by a bigger-than-expected 16,000 to a seasonally adjusted 357,000 last week. The figure was the second straight weekly increase in the filing of unemployment benefits, underscoring the weak pace of hiring in the U.S.

Meanwhile, the U.S. government released its final revision on fourth-quarter economic growth, saying the U.S. grew at an annualized rate of 0.4%, below the 0.5% rate forecast by economists.

"The jobs numbers today were not very inspiring and GDP was kind of in line," said Phil Flynn, analyst at Price Futures Group, a brokerage in Chicago.

Nymex crude prices have notched gains of roughly 6% so far in March. But analysts have attributed the rally to expectations that the supply glut in the central U.S. had begun to ease, lifting prices there.

The price of Brent crude, regarded as a more reliable global benchmark, is down about 1.2% in March.

Front-month April reformulated gasoline blendstock, or RBOB, settled 1.01 cent, or 0.3%, lower, at $3.1054 a gallon. April heating oil settled 0.02 cent lower at $2.9152 a gallon.

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Oil Futures Finish Higher as S&P 500 Aims for Record

Oil futures finished higher Thursday, setting a six-week high as the Standard & Poor's 500 was poised to finish at a record.

Light, sweet crude for May delivery settled 65 cents, or 0.7%, higher, at $97.23 a barrel on the New York Mercantile Exchange. That's the highest settlement since Feb. 14.

Brent crude on the ICE futures exchange settled 33 cents, or 0.3% higher, at $110.02 a barrel.

Futures rallied as the benchmark S&P 500 pushed higher and was set to surpass its previous record set in October 2007. The index recently rose 0.3%, to 1567.08.

"The stock-market record for the S&P is chipping in here," said John Kilduff, founding partner at Again Capital in New York. "It's a risk-on day."

Oil futures and equities often trade in tandem since both are considered risky assets that investors use as a bet on economic growth. In addition, crude traders often turn to equities as a barometer of broader economic sentiment.

Despite Thursday's strong stock market performance, several reports put a damper on the crude market earlier in the session, keeping it in negative territory for much of the morning.

Jobless claims rose by a bigger-than-expected 16,000 to a seasonally adjusted 357,000 last week. The figure was the second straight weekly increase in the filing of unemployment benefits, underscoring the weak pace of hiring in the U.S.

Meanwhile, the U.S. government released its final revision on fourth-quarter economic growth, saying the U.S. grew at an annualized rate of 0.4%, below the 0.5% rate forecast by economists.

"The jobs numbers today were not very inspiring and GDP was kind of in line," said Phil Flynn, analyst at Price Futures Group, a brokerage in Chicago.

Nymex crude prices have notched gains of roughly 6% so far in March. But analysts have attributed the rally to expectations that the supply glut in the central U.S. had begun to ease, lifting prices there.

The price of Brent crude, regarded as a more reliable global benchmark, is down about 1.2% in March.

Front-month April reformulated gasoline blendstock, or RBOB, settled 1.01 cent, or 0.3%, lower, at $3.1054 a gallon. April heating oil settled 0.02 cent lower at $2.9152 a gallon.

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Crude-Oil Futures Settle 42 Cents Higher

Crude-oil futures prices settled at a three-week high Friday amid mixed signals on a sustained economic recovery in the world's biggest oil consumer.

U.S. benchmark crude mustered a modest gain, but ended well below the high of the trading session as market participants weighed fresh data. The Federal Reserve said U.S. industrial production rose 0.7% in February, exceeding economists' forecasts and eclipsing concerns over a sharp drop in consumer confidence and a rise in consumer prices.

The Thomson-Reuters/University of Michigan consumer sentiment index fell to 71.8 in mid-March, its lowest level since December 2011 and down from 77.6 in February. Economists have expected the reading to move up to 78. Also Friday, the Labor Department said the consumer price index in February rose 0.7%, the biggest gain since June 2009, led by higher gasoline prices.

"We are seeing some strong signs, but whether they are strong enough is still up in the air," said Gene McGillian, analyst and broker at Tradition Energy. He noted that oil prices have recovered from two-month lows below $90 a barrel hit early this month, but said it's unclear whether economic and oil-market fundamentals can sustain a further rally.

Light, sweet crude oil for April delivery on the New York Mercantile Exchange settled 42 cents higher, at $93.45 a barrel. That's the highest price since Feb. 20, but well below the session high of $93.84 a barrel.

ICE North Sea Brent for May delivery, in its first day as the front-month contract, settled 86 cents higher, at $109.82 a barrel. Traders said the contract found buyers after front-month prices hovered near the 200-day moving average price, a key indicator for chart-based trading, near $109.40 a barrel in recent days.

News that Norwegian oil producer Statoil shut its North Sea Oseberg oil field on Thursday after a power outage and gas leak also kept Brent supported. Oseberg is expected to supply 3.6 million barrels of crude during April, and analysts said they will be watching developments for signs of any shortfall. The output snag comes as North Sea flows have recovered from earlier operating problems.

U.S. crude oil gained as market participants ignored lofty crude oil stocks and sluggish oil-demand growth. The latest data from the Energy Information Administration show refinery maintenance has slowed crude oil processing to a two-year low and pushed crude oil inventories to more than 40 million barrels above the five-year average. Inventories of 384 million barrels are sufficient to cover more than 27 days of refiner needs, the highest level in 21 years.

Analysts said investors appear to be taking the view that crude inventories will decline when maintenance ends and refineries ramp up output of gasoline and diesel fuel.

Days before a trip to the Middle East, President Barack Obama said it would take Iran a year or more to build a nuclear weapon, an assessment that sets up a potential area of discord with Israel's leader. The president's timelime is longer than the more urgent one usually cited by Israeli Prime Minister Benjamin Netanyahu. The timeline, the first publicly given by Mr. Obama, appeared to be tamping down any expectations for pre-emptive action against Iran while aiming to assure its closest Mideast ally of U.S. support.

Iran had been the second-biggest oil producer in the Organization of the Petroleum Exporting Countries, but international sanctions over its nuclear program have cut flows to their lowest level in 30 years.

April-delivery reformulated gasoline futures settled up 2.25 cents at $3.1638 a gallon after falling 1.9% in the prior four days. April heating oil settled up 0.95 cent at $2.939 a gallon.

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Crude-Oil Futures Settle 42 Cents Higher

Crude-oil futures prices settled at a three-week high Friday amid mixed signals on a sustained economic recovery in the world's biggest oil consumer.

U.S. benchmark crude mustered a modest gain, but ended well below the high of the trading session as market participants weighed fresh data. The Federal Reserve said U.S. industrial production rose 0.7% in February, exceeding economists' forecasts and eclipsing concerns over a sharp drop in consumer confidence and a rise in consumer prices.

The Thomson-Reuters/University of Michigan consumer sentiment index fell to 71.8 in mid-March, its lowest level since December 2011 and down from 77.6 in February. Economists have expected the reading to move up to 78. Also Friday, the Labor Department said the consumer price index in February rose 0.7%, the biggest gain since June 2009, led by higher gasoline prices.

"We are seeing some strong signs, but whether they are strong enough is still up in the air," said Gene McGillian, analyst and broker at Tradition Energy. He noted that oil prices have recovered from two-month lows below $90 a barrel hit early this month, but said it's unclear whether economic and oil-market fundamentals can sustain a further rally.

Light, sweet crude oil for April delivery on the New York Mercantile Exchange settled 42 cents higher, at $93.45 a barrel. That's the highest price since Feb. 20, but well below the session high of $93.84 a barrel.

ICE North Sea Brent for May delivery, in its first day as the front-month contract, settled 86 cents higher, at $109.82 a barrel. Traders said the contract found buyers after front-month prices hovered near the 200-day moving average price, a key indicator for chart-based trading, near $109.40 a barrel in recent days.

News that Norwegian oil producer Statoil shut its North Sea Oseberg oil field on Thursday after a power outage and gas leak also kept Brent supported. Oseberg is expected to supply 3.6 million barrels of crude during April, and analysts said they will be watching developments for signs of any shortfall. The output snag comes as North Sea flows have recovered from earlier operating problems.

U.S. crude oil gained as market participants ignored lofty crude oil stocks and sluggish oil-demand growth. The latest data from the Energy Information Administration show refinery maintenance has slowed crude oil processing to a two-year low and pushed crude oil inventories to more than 40 million barrels above the five-year average. Inventories of 384 million barrels are sufficient to cover more than 27 days of refiner needs, the highest level in 21 years.

Analysts said investors appear to be taking the view that crude inventories will decline when maintenance ends and refineries ramp up output of gasoline and diesel fuel.

Days before a trip to the Middle East, President Barack Obama said it would take Iran a year or more to build a nuclear weapon, an assessment that sets up a potential area of discord with Israel's leader. The president's timelime is longer than the more urgent one usually cited by Israeli Prime Minister Benjamin Netanyahu. The timeline, the first publicly given by Mr. Obama, appeared to be tamping down any expectations for pre-emptive action against Iran while aiming to assure its closest Mideast ally of U.S. support.

Iran had been the second-biggest oil producer in the Organization of the Petroleum Exporting Countries, but international sanctions over its nuclear program have cut flows to their lowest level in 30 years.

April-delivery reformulated gasoline futures settled up 2.25 cents at $3.1638 a gallon after falling 1.9% in the prior four days. April heating oil settled up 0.95 cent at $2.939 a gallon.

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API: TV Ads Show Americans Don't Support Higher Industry Taxes

New TV ads show Americans don't support higher taxes on the oil and natural gas industry, API Executive Vice President Marty Durbin told reporters in a briefing Wednesday morning:

"Starting today, the API is running ads on broadcast and cable channels that feature the unscripted words of everyday Americans who believe higher taxes on energy companies may translate into higher energy costs for consumers. We decided to run the ads to remind Congress that at a time when many families have had to scramble to balance their budgets, asking them to pay more for the energy they need to live their lives is bad policy and frankly bad politics.

"According to a study by Wood Mackenzie a $5 billion per year tax increase would result in a decrease of $233 billion in revenue to federal, state and local governments by 2030. Further, the study estimates that increased investments, as a result of pro-growth and energy development policies, could generate an additional $800 billion in revenue by 2030. That's a $1 trillion difference to government's bottom line.

"If increased revenue is truly the objective [of those proposing to increase taxes on the industry], then allow the oil and natural gas industry to continue to do what it has always done – invest in America's economy by providing good-paying jobs here at home that develop the energy America needs. That's what the American people support and in the long-term the result would be far better for the American economy, for consumers, for our energy security, and for the nation's long-term economic growth."

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API: TV Ads Show Americans Don't Support Higher Industry Taxes

New TV ads show Americans don't support higher taxes on the oil and natural gas industry, API Executive Vice President Marty Durbin told reporters in a briefing Wednesday morning:

"Starting today, the API is running ads on broadcast and cable channels that feature the unscripted words of everyday Americans who believe higher taxes on energy companies may translate into higher energy costs for consumers. We decided to run the ads to remind Congress that at a time when many families have had to scramble to balance their budgets, asking them to pay more for the energy they need to live their lives is bad policy and frankly bad politics.

"According to a study by Wood Mackenzie a $5 billion per year tax increase would result in a decrease of $233 billion in revenue to federal, state and local governments by 2030. Further, the study estimates that increased investments, as a result of pro-growth and energy development policies, could generate an additional $800 billion in revenue by 2030. That's a $1 trillion difference to government's bottom line.

"If increased revenue is truly the objective [of those proposing to increase taxes on the industry], then allow the oil and natural gas industry to continue to do what it has always done – invest in America's economy by providing good-paying jobs here at home that develop the energy America needs. That's what the American people support and in the long-term the result would be far better for the American economy, for consumers, for our energy security, and for the nation's long-term economic growth."

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Crude Oil Squeezes Out Gain as S&P 500 Forges Higher

NEW YORK--Oil futures eked out a gain Monday, rebounding from earlier losses, as equities posted fresh highs on the day.

Light, sweet crude for April delivery settled 11 cents, or 0.1%, higher at $92.06 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 63 cents, or 0.6%, lower at $110.22 a barrel.

Crude oil often follows the equities market, which traders turn to as a barometer for overall economic sentiment, and appeared to pull oil prices out of negative territory in afternoon trading.

Although the relationship between the two markets hasn't been as strong in recent weeks, "there's a certain degree of risk-on," said Bob Yawger, director of energy futures at Mizuho. "It's hard to cream crude when equities are posting all-time highs."

The Standard & Poor's 500 index was recently 0.3% higher, at 1555.72. Last week, the Dow Jones Industrial Average posted record highs.

Nymex crude was lower earlier in the session after data on Chinese industrial production and retail sales came in below expectations, raising concerns about oil demand in the world's No. 2 oil consumer.

Elevated stockpiles and production in the U.S. and slack demand there have also weighed on oil prices. U.S. oil inventories are up nearly 6% this year and are well above five-year average levels. Analysts surveyed by Dow Jones Newswires expect an additional build of 2.4 million barrels in the Energy Information Administration's weekly survey due Wednesday.

"In the big picture, we're still looking for a build," said Carl Larry, president of the oil-trading advisory firm Oil Outlooks & Opinions.

Brent crude in particular has posted steep losses in recent sessions, as a key North Sea pipeline has resumed operations, restoring supply of the European benchmark.

Several analysts say oil prices have found a floor near $90 a barrel. Two key technical indicators, the 100-day moving average and the 200-day moving average, are both around $90 a barrel and have served as important thresholds.

Front-month April reformulated gasoline blendstock, or RBOB, settled 5.11 cents, or 1.6%, lower at $3.1524 a gallon. April heating oil settled 0.58 cent, or 0.2%, lower at $2.9691 a gallon.

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Crude Oil Squeezes Out Gain as S&P 500 Forges Higher

NEW YORK--Oil futures eked out a gain Monday, rebounding from earlier losses, as equities posted fresh highs on the day.

Light, sweet crude for April delivery settled 11 cents, or 0.1%, higher at $92.06 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 63 cents, or 0.6%, lower at $110.22 a barrel.

Crude oil often follows the equities market, which traders turn to as a barometer for overall economic sentiment, and appeared to pull oil prices out of negative territory in afternoon trading.

Although the relationship between the two markets hasn't been as strong in recent weeks, "there's a certain degree of risk-on," said Bob Yawger, director of energy futures at Mizuho. "It's hard to cream crude when equities are posting all-time highs."

The Standard & Poor's 500 index was recently 0.3% higher, at 1555.72. Last week, the Dow Jones Industrial Average posted record highs.

Nymex crude was lower earlier in the session after data on Chinese industrial production and retail sales came in below expectations, raising concerns about oil demand in the world's No. 2 oil consumer.

Elevated stockpiles and production in the U.S. and slack demand there have also weighed on oil prices. U.S. oil inventories are up nearly 6% this year and are well above five-year average levels. Analysts surveyed by Dow Jones Newswires expect an additional build of 2.4 million barrels in the Energy Information Administration's weekly survey due Wednesday.

"In the big picture, we're still looking for a build," said Carl Larry, president of the oil-trading advisory firm Oil Outlooks & Opinions.

Brent crude in particular has posted steep losses in recent sessions, as a key North Sea pipeline has resumed operations, restoring supply of the European benchmark.

Several analysts say oil prices have found a floor near $90 a barrel. Two key technical indicators, the 100-day moving average and the 200-day moving average, are both around $90 a barrel and have served as important thresholds.

Front-month April reformulated gasoline blendstock, or RBOB, settled 5.11 cents, or 1.6%, lower at $3.1524 a gallon. April heating oil settled 0.58 cent, or 0.2%, lower at $2.9691 a gallon.

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BP Expects Some US Gulf Oil Spill Claims To Be Higher Than Anticipated

LONDON - BP PLC now expects to pay more than previously anticipated in compensation for private economic and property damage stemming from the Deepwater Horizon disaster in the Gulf of Mexico, according to the company's annual report.

This is because average payments for business economic loss claims so far have been higher than anticipated, the company said. BP said this means it can no longer give a reliable estimate for the total cost of the settlement it agreed last year with the plaintiffs' steering committee--a group representing individuals with economic, property or medical damage claims--other than to say it will be significantly higher than $7.7 billion.

In a speech earlier this week BP Chief Executive Bob Dudley said the company has spent over $24 billion in response, including clean-up and restoration costs and in payments on claims made by individuals, businesses and governments for the 2010 disaster. This latest escalation in the cost of the disaster, which killed 11 men and triggered the worst offshore oil spill in U.S. history, comes as the company is embroiled in a civil trial to determine environmental fines that could total as much as $17.6 billion.

BP has spent or provisioned more than $40 billion for the Deepwater Horizon disaster, Mr. Dudley added.

BP said the final cost of the PSC settlement is likely to be higher than $7.7 billion, which is the company's current estimate of total payments under the deal, excluding future claims for business economic loss whose size cannot now be determined.

In February BP revised up the cost of the PSC settlement to $8.5 billion--already an increase from the original estimated cost of $7.8 billion last year--but it has now withdrawn that guidance. The company said it would issue fresh guidance for the higher costs when it is able to calculate a reliable new estimate.

BP said it can't give an estimate for the final total of compensation payments to individuals and businesses. "Management has concluded that no reliable estimate can be made of any business economic loss claims not yet received or processed," BP said.

BP said costs were higher because the administrator of the compensation fund was using a more generous interpretation of the payout agreement, resulting in higher number and value of awards than BP had assumed in their initial estimate.

This week a U.S. federal court affirmed the administrator's interpretation of the economic and property damages settlement agreement. BP said it disagrees with the ruling and will challenge it.

However, the U.K.-listed oil giant said that even if it is successful in appealing the court's ruling, the total cost of the settlement agreement will still exceed $7.7 billion. "If BP is not successful in its challenge to the court's ruling, a further signi?cant increase to the total estimated cost of the settlement will be required," BP said.

The company is now in the second week of a civil trial in New Orleans to apportion blame for the 2010 accident. A second trial, scheduled for the fall, will determine how much oil leaked into the Gulf of Mexico. The two trials will determine the size of the fines BP could face under the U.S. Clean Water Act, which could total as much as $17.6 billion

BP has said these fines should be a maximum of $3.4 billion.

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Crude Oil Futures Settle Higher as U.S. Jobs Market Improves

NEW YORK--Oil futures rose to their highest level all week Friday, as positive U.S. jobs data lifted hopes for higher oil demand.

Light, sweet crude for April delivery settled 39 cents, or 0.4%, higher at $91.95 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently fell 32 cents, or 0.3%, to $110.82 a barrel.

Futures got a boost after the Labor Department said employers added 236,000 jobs in February, far more than the 160,000 forecast by economists. Unemployment fell 0.2 percentage point to 7.7%, the lowest level since the end of 2008.

The data is closely watched in the oil market because the health of the job market in the U.S.--the world's biggest oil consumer--is closely correlated with crude-oil demand.

"This number is a big step," said Carl Larry, head of the oil-trading advisory firm Oil Outlooks and Opinions. "I don't think anybody expected that."

Futures were lower prior to the 8:30 a.m. EST data, then pared their losses throughout the day to end the session in positive territory. Market observers said a late-session rally in the gasoline market also helped pull crude-oil prices higher.

"Crude markets were definitely following the gasoline move today," said Michael Truscelli, broker at oil options brokerage Paramount Options in New York. "There was a lot of interest at the end of the day."

Front-month April reformulated gasoline blendstock, or RBOB, settled 8.02 cents, or 2.6%,, higher at $3.2035 a gallon.

A steadily improving jobs market has buoyed the oil market in recent months, although steadily rising domestic production and uncertain global demand has kept prices in check.

Oil futures failed to keep up with the sharp rally staged by equities, as the payrolls data sent investors snapping up another asset: the U.S. dollar. A stronger dollar typically weighs on oil prices because it makes the dollar-denominated commodity more expensive for holders of other currencies.

The ICE Dollar Index, which tracks the greenback against a basket of currencies, shot to its highest level since early August, recently rising 0.9% to 82.804.

April heating oil settled 0.46 cent, or 0.2%, lower at $2.9749 a gallon.

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Crude Oil Futures Settle 80 Cents Higher at $96.66

Crude-oil futures prices climbed Tuesday on expectations of some easing of constraints that have kept inventories at lofty levels at a key Midwest terminal.

Traders also said U.S. benchmark crude oil futures for March delivery were higher on position adjustments ahead of the contract's expiration on Wednesday and activity was thin due to a week-long industry event in London.

The Seaway Pipeline, which carries crude oil from Cushing, Okla. to the Gulf Coast refining region, will increase flows from January levels, an executive of the company operating the line said. Operational snags on the line had restricted flows, allowing inventories to build up at Cushing, and pressure futures prices on the New York Mercantile Exchange for the U.S. benchmark contract, which is delivered at Cushing.

Enterprise Products Partners LP's (EPD) Seaway Pipeline is expected to carry an average of 295,000 barrels of oil a day between February and May, according to testimony from an executive filed with U.S. regulators. That is up from only about 180,000 barrels a day in January, the company said.

The pipeline expanded its capacity from 150,000 to 400,000 barrels a day in early January. But the amount of crude carried, or throughput, won't reach capacity for the "foreseeable future" because of the types of oil being moved, said William Ordemann, Enterprise's group senior vice president.

The remarks by the executive, filed Friday with the Federal Energy Regulatory Commission, seem to indicate that the percentage of heavy crude transported in Seaway is larger than originally thought. The nameplate capacity applies to barrels of light, sweet crude, and diminishes when larger loads of heavier crudes are shipped.

Mr. Ordemann said Seaway hopes "at some point" to increase the throughput of its line to about 335,000 barrels a day of oil, but "until Seaway has additional operating experience" with new pumping equipment, "it is not possible to say with precision when or if that will occur."

The fortunes of the U.S. benchmark and North Sea Brent, a global benchmark, recently have been tied to how much crude oil gets from the Midcontinent to the Gulf refineries. With Seaway flows increasing, domestic supplies will reach the Gulf, and compete with imports that are priced in relation to Brent.

Last October, with Cushing stocks bloated, Brent's premium to the U.S. benchmark climbed to near $24 a barrel. By January, on hopes of the Seaway expansion, the premium narrowed to below $16 a barrels. Operation snags that have prevented the line from running at capacity have allowed Brent to trade at a $20.86 a barrel premium on Tuesday.

"The market's not really catching fire today, we're just seeing some profit-taking and position adjustments," said Andy Lebow, vice president for energy futures at Jefferies Bache LLC.

Light, sweet crude oil for March-delivery on the New York Mercantile Exchange settled 80 cents higher, at $96.66 a barrel. The rise was the biggest since Feb. 11. ICE April Brent crude settled 14 cents higher at $117.52 a barrel.

While analysts see some potential for relief in Cushing stockpiles, upcoming weekly data are expected to show nationwide crude inventories rose by 2.2 million barrels last week.

Because of the Presidents Day holiday Monday, release of the inventory data is delayed by a day this week.

The closely watched government survey from the Energy Information Administration is due to be released at 11 a.m. EST Thursday, while the American Petroleum Institute, an industry group, releases its inventory report at 4:30 p.m. EST on Wednesday afternoon.

The survey is expected to show refiners trimmed operations by 0.3 percentage point from EIA's level of 83.8% of capacity last week. The lower runs are expected to trim petroleum product inventories.

Gasoline stocks are expected to drop by 800,000 barrels, while distillate stocks, comprising heating oil and diesel fuel, are expected to fall by 1.5 million barrels.

Expectations of tighter supplies have lifted the price of reformulated gasoline blendstock futures sharply, but profit-taking cut prices Tuesday. Front-month RBOB prices have gained more than 15%, or about 43 cents a gallon, since Jan. 15 amid the seasonal shift from winter-grade to summer-grade fuel.

Reformulated gasoline futures prices on the New York Mercantile Exchange, which have climbed in nine of the past 10 weeks, were off 1.33 cents, at $3.1212 a gallon, after a 20-week high Friday.

March heating oil settled 2.98 cents lower, at $3.1806 a gallon, a two-week low. The drop in dollar-terms was the biggest since Jan. 15.

Angel Gonzalez contributed to this report.

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Crude-Oil Futures End Higher; Brent Spread to US Benchmark at 1-Month High

Crude-oil futures prices rose Friday amid continued hefty gains in U.S. equities price. Global benchmark Brent crude oil hit a 20-week high while worries over logistical problems at a key pipeline capped the rise in U.S. prices.

Brent's premium to the U.S. benchmark price on the New York Mercantile Exchange blew out by $1 a barrel, to $19.06 a barrel, the most since Jan. 3, after operators of the Seaway Pipeline said the key conduit may not be free from potential operational restraints until work on a new section of pipeline is completed near the start of the fourth quarter.

Seaway, the pipeline outlet for growing crude oil supplies from the Midwest to the key Gulf Coast refining hub, last month more than doubled operational capacity to 400,000 barrels a day last month. Anticipation that the higher flows to the Gulf from Cushing, Okla.--the delivery point of the Nymex contract--had driven U.S. crude prices higher, on the notion they would gain market share at the expense of costlier imports, priced against the value of internationally traded Brent.

While the spread did narrow briefly in January to its weakest level since July, at under $16 a barrel, news last week that operating problems cut the flow on the line to just 175,000 barrels a day, pushed it back out, with Brent galloping higher, at the expense of the U.S. benchmark.

U.S. crude also is held back by widespread seasonal refinery maintenance that is reducing near-term demand. Crude's modest support, analysts said, comes from carryover strength in petroleum products, which are climbing to their highest levels since early in the fourth quarter on anticipation that lower refinery output will tighten product inventories.

Seaway is "not doing what the market thought it would do originally," said Gene McGillian, analyst and broker at Tradition Energy, referring to the widening of the price spread between the benchmarks. Goldman Sachs said on Jan. 22, before the operational snag at Seaway, that it expected Brent's premium to the U.S. benchmark to erode steadily to $6 a barrel by the end of 2013.

Traders said Brent, which is exported globally, also is reflecting increased market tensions over recent unrest in Algeria and the Middle East.

Nymex light, sweet crude oil for March delivery settled 26 cents higher, at $97.77 a barrel, after trading in a range of $96.51 to $98.15 a barrel.

ICE March North Sea Brent settled 1.1%, or $1.21 a barrel, higher at $116.76 a barrel, the most since Sept. 13.

U.S. crude gained 2%, or $1.89 a barrel in the latest week, while Brent jumped 3.1%, or $3.48 a barrel.

Traders said the evolving issue regarding Seaway will be a major focus of the market in coming days, but there is concern that prices have become overvalued.

Matt Smith, commodity analyst at Schneider Electric in Louisville, Ky., said "the underlying fundamentals don't justify" U.S. crude oil futures approaching $100 a barrel.

"It was only a few weeks ago we were worried about OECD oil demand being weak," he said, referring to the major industrialized nations that comprise the Organization for Economic Cooperation and Development. "Now, we're swept up in the euphoria over equities."

Mr. McGillian at Tradition Energy said the "bulls still in charge, but we're reaching the point where we need to see new signs of strong demand" to justify gains.

Rising heating oil and gasoline prices also gained support from higher Brent prices, as their values are tied to the crude oil that is widely used by refiners on the Gulf Coast and the East Coast.

Front-month reformulated gasoline prices climbed in 11 of the past 12 sessions and in seven of the past eight weeks. March gasoline settled at $3.0536 a gallon, up 2.19 cents on the day and the highest level since Sept. 28.

March heating oil settled 4.19 cents higher, at $3.1606 a gallon, the highest price since Oct. 18.

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Chevron 4Q Net Up 41% on Asset-Exchange Gain, Higher Production

Chevron Corp.'s fourth-quarter earnings rose 41% as increased production helped drive a double-digit rise in upstream earnings.

Chevron earlier this month said its fourth-quarter profit would be "notably higher" than the previous quarter's as a $1.4 billion gain from an upstream asset exchange in Australia and West Texas oil field acquisitions would contribute to increased oil and gas production. But the company also warned it would pay up to $400 million in potential accruals related to income taxes, pension settlements and environmental matters during the quarter.

Chevron, the second-largest U.S. oil company by market value after Exxon Mobil Corp., also said Thursday it will consolidate its supply and trading functions into a single group within its gas and midstream business, effective June 1. The downstream organization currently oversees the company's trading operations for crude oil and refined products, while the company's gas and midstream business was responsible for Chevron's natural gas and liquefied natural gas trading operations.

Chevron reported a profit of $7.25 billion, or $3.70 a share, up from $5.12 billion, or $2.58 a share, a year earlier. Revenue rose 1% to $60.55 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of $3.03 a share on revenue of $68.64 billion.

Operating margin improved to 19.8% from 16.6%.

Exploration-and-production earnings rose 20% to $6.86 billion as total oil-equivalent production increased 1.1% to 2.67 million barrels per day.

The refining, marketing and chemical operations, known as the downstream segment, swung to a profit of $925 million from a year-earlier loss of $61 million.

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Crude-Oil Futures End Higher; Brent Spread to US Benchmark at 1-Month High

Crude-oil futures prices rose Friday amid continued hefty gains in U.S. equities price. Global benchmark Brent crude oil hit a 20-week high while worries over logistical problems at a key pipeline capped the rise in U.S. prices.

Brent's premium to the U.S. benchmark price on the New York Mercantile Exchange blew out by $1 a barrel, to $19.06 a barrel, the most since Jan. 3, after operators of the Seaway Pipeline said the key conduit may not be free from potential operational restraints until work on a new section of pipeline is completed near the start of the fourth quarter.

Seaway, the pipeline outlet for growing crude oil supplies from the Midwest to the key Gulf Coast refining hub, last month more than doubled operational capacity to 400,000 barrels a day last month. Anticipation that the higher flows to the Gulf from Cushing, Okla.--the delivery point of the Nymex contract--had driven U.S. crude prices higher, on the notion they would gain market share at the expense of costlier imports, priced against the value of internationally traded Brent.

While the spread did narrow briefly in January to its weakest level since July, at under $16 a barrel, news last week that operating problems cut the flow on the line to just 175,000 barrels a day, pushed it back out, with Brent galloping higher, at the expense of the U.S. benchmark.

U.S. crude also is held back by widespread seasonal refinery maintenance that is reducing near-term demand. Crude's modest support, analysts said, comes from carryover strength in petroleum products, which are climbing to their highest levels since early in the fourth quarter on anticipation that lower refinery output will tighten product inventories.

Seaway is "not doing what the market thought it would do originally," said Gene McGillian, analyst and broker at Tradition Energy, referring to the widening of the price spread between the benchmarks. Goldman Sachs said on Jan. 22, before the operational snag at Seaway, that it expected Brent's premium to the U.S. benchmark to erode steadily to $6 a barrel by the end of 2013.

Traders said Brent, which is exported globally, also is reflecting increased market tensions over recent unrest in Algeria and the Middle East.

Nymex light, sweet crude oil for March delivery settled 26 cents higher, at $97.77 a barrel, after trading in a range of $96.51 to $98.15 a barrel.

ICE March North Sea Brent settled 1.1%, or $1.21 a barrel, higher at $116.76 a barrel, the most since Sept. 13.

U.S. crude gained 2%, or $1.89 a barrel in the latest week, while Brent jumped 3.1%, or $3.48 a barrel.

Traders said the evolving issue regarding Seaway will be a major focus of the market in coming days, but there is concern that prices have become overvalued.

Matt Smith, commodity analyst at Schneider Electric in Louisville, Ky., said "the underlying fundamentals don't justify" U.S. crude oil futures approaching $100 a barrel.

"It was only a few weeks ago we were worried about OECD oil demand being weak," he said, referring to the major industrialized nations that comprise the Organization for Economic Cooperation and Development. "Now, we're swept up in the euphoria over equities."

Mr. McGillian at Tradition Energy said the "bulls still in charge, but we're reaching the point where we need to see new signs of strong demand" to justify gains.

Rising heating oil and gasoline prices also gained support from higher Brent prices, as their values are tied to the crude oil that is widely used by refiners on the Gulf Coast and the East Coast.

Front-month reformulated gasoline prices climbed in 11 of the past 12 sessions and in seven of the past eight weeks. March gasoline settled at $3.0536 a gallon, up 2.19 cents on the day and the highest level since Sept. 28.

March heating oil settled 4.19 cents higher, at $3.1606 a gallon, the highest price since Oct. 18.

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