REFINERS DRIVE DEMAND
The convergence of the two front-month crude 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. Stocks at Cushing have fallen to 46 million barrels from 52 million in January.
Refiners, enjoying bumper profit margins on export sales, are running their hardest since 2005, drawing down U.S. crude inventories at the fastest rate on record.
Some traders expressed skepticism that the U.S. contract would extend its gains.
The measure of the relative strength of U.S. crude oil futures has shown them technically "overbought" for the longest stretch in four years, according to one indicator.
The relative strength index, or RSI, has been above 70 since July 5, a sign that a commodity has been overbought and ready for a fall. On Friday, it ended above 75.
"Now that U.S. crude is almost on par with Brent, we have to search for a strong enough factor that's going to push both markets higher," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
"Here in the U.S., the economy continues to improve, but it's not all roses yet. The market has over-extended and it's vulnerable to profit-taking."