Brent crude higher, economic worry pares gains

U.S. crude turned lower. Data showed Japan‘s economy expanded in the second quarter at half the pace expected while Greece’s contracted 6.2 percent on an annual basis, fanning concerns about economic growth and weighing on equities.

Brent had jumped more than $2 and U.S. crude more than $1 earlier on support from tightening North Sea supplies and Middle East tensions, including an intensifying debate in Israel on whether to strike Iran’s disputed nuclear program.

A weak dollar also helped crude futures‘ early surge, along with continuing hopes that signs of economic weakness will spur central banks to stimulate a sputtering global economy.

The expected North Sea production drop to record lows in September and the sensitivity to Middle East supply disruptions helped send Brent’s premium over U.S. crude to more than $21 a barrel.

Those factors also sent front-month Brent’s price premium to the nearby month above $2 a barrel intraday, a 2012 high, ahead of front-month September’s contract expiration on Thursday.

Brent September crude was up 55 cents at $113.50 a barrel by 11:26 a.m. EDT (1526 GMT), after reaching $115.11, the highest intraday front-month price since May 4.

“The likelihood of some sort of intervention to stimulate economies is supporting the market,” said Christopher Bellew, an oil broker at Jefferies Bache in London. “Also the North Sea, Iran and the Middle East are still a factor.”

U.S. September crude was down 55 cents at $92.32 a barrel, back below the $92.91 100-day moving average after reaching $94.14.

Trading volumes remained thin, helping cause the seesaw price trajectory, according to traders and analysts.

“Weak economic data from Japan is a concern as Japan is a big consumer of oil,” said Phil Flynn, analyst at Price Futures Group in Chicago.

“On the upside, oil futures have been supported by geopolitical concerns in the Middle East,” Flynn said.

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