Oil futures: Brent-WTI spread hits record after market rout

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The two major crude-oil markets traded in different directions Friday, as traders searched for clues on the market's next move following Thursday's broad market rout.

Light, sweet crude for September delivery recently traded 93 cents, or 1.2%, lower at $81.45 a barrel on the New York Mercantile Exchange. Brent crude for October on the ICE futures exchange traded 25 cents higher at $107.24 a barrel.

The divergent trading pushed the spread between these global benchmarks to the widest level on record, with Europe's Brent at one point trading at a $26.41 premium to U.S.-traded WTI. The contracts historically trade within $1 of each other, but supply bottlenecks this year have moved the markets apart.

Traders said the divergent price action reflected the uncertainty and continued volatility in the oil market after U.S. crude tumbled more than 6% Thursday on fears that the economy could dip back into recession.

"The market keeps going into uncharted territory," said Gene McGillian, a broker and analyst with Tradition Energy. "The volatility we're seeing is really tough to get a grasp on."

Stock markets in the U.S. opened lower Friday.

Oil prices have tracked the moves in equities in recent days, as traders in both markets focused on how the debt crisis in Europe would affect global growth.

On Thursday, markets tumbled following a weak report on economic activity in the U.S. The Philadelphia Federal Reserve manufacturing index plunged into negative territory, reaching levels normally seen during recessions.

U.S.-traded WTI tumbled in overnight electronic trading, following global equities down and dropping as low as $79.17 a barrel before recovering most of those losses.

The $80 level is starting to offer some support, said Phil Flynn, an oil analyst with PFG Best. The dips below there in recent days have been followed by an influx of buying.

"Anything below $80 would seem to be the market saying we're in a recession. A close below $80 would be a psychological blow," Flynn said.

Front-month September reformulated gasoline blendstock, or RBOB, recently traded 1.62 cents, or 0.6%, higher at $2.7994 a gallon. September heating oil recently traded 1.33 cents, or 0.5%, higher at $2.8881 a gallon.



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