NYMEX May crude settled 16 cents lower at $97.07/b on Monday, as the complex came under pressure from a combination of weaker-than-expected US manufacturing data and the closure of ExxonMobil's 96,000 b/d Pegasus crude pipeline on Friday.
The front-month contract partially recovered from a low of $95.92/b seen during the morning session, but remained below Thursday's settle, with analysts stressing that the closure of the Pegasus line could slow the exodus of excess crude stocks out of the Midcontinent.
The pipeline, which moves mostly Canadian crude from Illinois to Texas, was closed Friday after springing a heavy leak.
Citi Futures Perspective analyst Tim Evans said that there are "fears that the outage on the Pegasus pipeline will cause crude oil supply to back up in to the US Midwest, including the Cushing, Oklahoma, delivery point for NYMEX WTI crude oil futures."
By contrast, the ICE Brent complex recovered from an overnight dip during afternoon US trading, buoyed by a drop in the dollar, analysts said. The May contract settled up $1.06/b at $111.08/b.
At the 2:30 p.m. EDT (1830 GMT) NYMEX market settle, the US dollar index was down 0.32% at 82.712.
"There was some disappointment with US data and with Europe still on holiday, there was some long dollar liquidation," Marc Chandler, foreign exchange analyst at Brown Brothers Harriman, said.
Front-month Brent's premium to NYMEX crude widened to $14.44/b -- its highest level in a little more than a week -- before settling at $14.01/b, up $1.22/b on the day.
Analysts also said that disappointing US manufacturing data had also contributed to the more bearish outlook for NYMEX crude Monday, after the Institute for Supply Management released its manufacturing index for March. The report, which showed a 2.9 percentage point decrease in manufacturing PMI for the month, fell to 51.3%, indicating growth below market expectations.
European markets remained closed in observance of the Easter holiday, which kept volume thin between Asian and US trading. Equity markets were largely lower in Asia, which carried over into US action, after a weaker-than-expected Chinese Manufacturing PMI and a poor survey of Japanese manufacturing confidence prompted markets to take a bearish turn.
At 2:30 p.m. EDT, the Standard & Poor's 500 was down 0.45% at 1,562.18, retreating from the record high close seen Thursday just short of an all-time traded high of 1,576.09 seen in October 2007. The Dow Jones Industrial Average was 0.14% lower at 14,558.4.
Product markets -- particularly the distillate complex -- rallied in afternoon US trading, spurred by the stronger Brent markets and Citgo's decision to shut the No. 2 fluid catalytic cracker at its 165,000 b/d East refinery in Corpus Christi, Texas, after the unit's power train developed a leak.
"Brent definitely started the rally on the weaker dollar, but the products caught up after Citgo," Carl Larry, president of Oil Outlooks, said.
NYMEX May heating oil settled 2.17 cents higher at $3.0687/gal, after climbing to a five-week high of $3.0902/gal in the wake of the news. ICE April gasoil was up $12.25/mt at $927.75/mt at the US market close, though volume remained light with European markets largely closed to trading.
NYMEX May RBOB settled 91 points lower at $3.1015/gal, sliding from a high of $3.1425/gal seen during the afternoon session.
