Oil Settles Above $108, WTI AT Premium To Brent

Oil hit a fresh 16-month high on Monday as U.S. crude futures traded above the Brent crude for the first time since 2010.

The bullish volatility continues in the oil market, pushing oil again above $108 per barrel with the start of the week amid signs of increasing demand in the world’s largest economy.

With economic conditions steady, demand worries tentatively offset and crude stockpiles at the lowest level since January, traders apparently rode the bullish wave again this week.

- NYMEX WTI Crude was at $108.46 a barrel after rising 41 cents

- ICE Brent Crude was at $108.45 a barrel after rising 38 cents

The WTI and Brent spread is narrowing and narrowing, suggesting that something is definitely going on the production aspect, as the WTI turned to be a premium for the first time in three years.

The spread of two global crude-market benchmarks comes as increased pipeline capacity has drained the glut of oil at the WTI delivery point of Cushing, Oklahoma, to the U.S. Gulf Coast, where refinery demand has been high.

WTI and Brent held firmly above $108 a barrel, after the Group of 20 nations pledged over the weekend to put growth before austerity, adding to hopes recovery in oil consumption.

A report by the U.S. Commodity Futures Commission (CFTC) helped fuel the rally on Friday, showing hedge funds’ bullish commodity bets near six-month peak after the U.S. Federal Reserve softened its stance on exiting monetary stimulus.

Chairman Ben S. Bernanke, addressing the Congress over two days last week, said the central bank’s stimulus-tapering plans were not set in stone and depended on the strength of the economy.

Bernanke had previously signaled that the Fed’s $85 billion in monthly bond purchases would be scaled back later this year and ended altogether in 2014. His words have always stoked the oil market.

- NYMEX Natural gas was at $3.74 per cubic feet after falling 1.24%

- ICE Gasoline was holding at $927.00 a gallon after rising a soft 0.08%

- NYMEX Heating oil was at $309.84 a gallon after rising 0.29%

The Fed’s ultra-loose monetary policy has retained pressured on long-term U.S. interest rates. Its three-year long term stimulus program has added to fears of inflation, stocking process of commodities, including oil and gold.

Also among the bullish catalyst, the U.S. Energy Department advised a few days earlier that domestic oil inventories dropped for the third week in a row, adding to signs of stronger demand for oil.

The dsollar weakness continues to give crude a major boost, as the dollar sets to register its worst monthly preformance of the year, falling against a six-currency basket with the Dollar Index below 83.