Trading volume in that spread halved from Tuesday to some 40,000 lots, still more than twice as much as normal trade last month. Total trading volumes in the Brent and WTI contracts were some 64 percent and 53 percent higher than the 30-day average, respectively.
BRENT/WTI SPREAD OVERDONE, CHINA DEMAND WEIGHS
Brent's premium to West Texas Intermediate crude at one point narrowed to $3.09, the weakest since December 2010, but settled at $4.52 per barrel.
The spread was largely a "momentum" trade, said Armstrong, as nothing fundamental in the market had changed. Traders are likely to take bets off the table in the spread as well as straight oil trades later this week or early next week after this run higher.
"I think we're getting a little overdone to the high side," he said.
Crude prices were somewhat capped on weak Chinese economic data. China is the world's second largest oil consumer.
A survey showed June growth in China's services sector at its weakest for nine months. This follows reports that showed China's manufacturing growth plumbed multi-month lows in June as foreign and domestic demand waned.
Oil trading on the CME Group's New York Mercantile Exchange is closed on Thursday in observance of the U.S. Independence Day holiday and electronic trading resumes at 6 p.m. for Friday July 5.