Brent slips below $104, rising supply weighs
Brent crude oil slid below $104 a barrel on Friday as rising supplies and doubts over China's economy Friday outweighed stronger signs of a U.S. recovery.
A firmer dollar also pressured oil.
"U.S. economic data have proved better than expected - initial jobless claims fell last week to their lowest level since the beginning of 2008 - but at the same time there are ample supplies on the oil market," said Commerzbank.
Brent was down 56 cents at $103.91 a barrel by 0938 GMT (3:08 p.m. IST). U.S. crude eased 67 cents to $95.72.
Investors had grown more confident after the number of Americans filing new claims for jobless aid fell last week to its lowest in more than 5 years, underlining resilience flagged earlier by a strong April employment report.
But doubts persisted about the health of the world's No. 2 economy, China. While consumer inflation rose in April, China's factory prices fell for a 14th straight month.
In the first quarter, China's gross domestic product grew by a less than forecast 7.7 per cent, frustrating investors who had hoped for a strong rebound of at least 8 percent.
U.S. investment bank Goldman Sachs said the spread between Brent and U.S. crude could shrink to $5 in the third quarter as the bottleneck at Cushing, Oklahoma, the U.S. midwest storage hub, eases as pipelines expand.
"... the opening of the Ho-Ho pipeline that connects the Houston crude market with the refineries in St. James will allow the glut of light sweet crude that is developing in the Texas Gulf Coast to be distributed more evenly on the entire US Gulf Coast," the bank said.
Stockpiles of U.S. crude hit another record level last week due to growing domestic production.
Expectations that further capacity utilisation could suck more oil out of Cushing and over to U.S. refiners on Thursday pulled the spread between U.S. crude and Brent to $7.47 - its narrowest since 2011.
The spread on Friday widened out to around $8.19.
Oil may draw some support from heightened tension in the Middle East after Hezbollah leader Hassan Nasrallah said Syria would respond to Israeli raids around Damascus by giving his group more sophisticated new weapons.
Copyright @ Thomson Reuters 2013
