Oil prices turned higher on Tuesday after data showing the U.S. manufacturing sector expanded in April at its fastest pace in 10 months eased concerns about slowing economic growth.
The supportive U.S. factory data from the Institute of Supply Management (ISM) helped U.S. crude end at its highest settlement in five weeks and lifted equities on Wall Street, sending the S&P 500 index up 1 percent and the Dow to its highest level since December 2007.
Technical buying kicked in after U.S. crude moved above the 50-day moving average at $105.21 a barrel. Crude had hit formidable resistance at that level in recent sessions.
"The ISM data pushed crude up and strong equities are helping, and when crude moved above the 50-day moving average that triggered some technical buying," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Earlier data showing China's official purchasing managers' index (PMI) rose to a 13-month high in April helped limit losses related to worries about sputtering economic growth in the euro zone and the United States.
Brent June crude rose 19 cents to settle at $119.66 a barrel, after two weaker closes, having swung from $118.80 to $120.02. U.S. June crude gained $1.29 to settle at $106.16, highest close since March 27.
Total U.S. crude trading volume outpaced Brent's and neared its 30-day average, but a holiday that shut markets in much of Europe and Asia helped limit volumes.
U.S. RBOB gasoline futures fell more than 2 cents, with the June contract in the front-month spot after the expiration of the May contract on Monday. Heating oil closed less than a penny higher.
U.S. gasoline demand fell last week from the previous week even though pump prices fell 6 cents a gallon, and demand was also down 5.6 percent from a year ago even though pump prices were 1.3 percent lower on the year, MasterCard said in a report.
BRENT/U.S. CRUDE SPREAD NARROWS
The Brent/U.S. crude spread <CL-LCO1=R> narrowed, leaving Brent's premium at $13.50 a barrel. The possibility of another pipeline reversal to alleviate a glut in Midwest crude supplies may have helped narrow the spread, brokers and traders said.
Marathon Petroleum Corp said it is considering all options for the Capline crude oil pipeline running from Louisiana to the U.S. Midwest in which it has a 30 percent interest.
Last month's news that Enterprise Product Partners and Enbridge plan to reverse the flow of the Seaway oil pipeline by mid-May, two weeks ahead of schedule, helped sharply reduce Brent's premium to its U.S. counterpart.
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