Oil trades at highest level even as US pump prices remain steady

Oil cut losses in New York to trade at the highest levels in over five months amid signs of shrinking stockpiles in the US.

Futures remained unchanged after closing at $102 a barrel yesterday and US crude inventories fell for the second week, the Energy Department said.

Oil prices shot up yesterday after Enbridge Inc said it would reverse the direction of the Seaway pipeline, adding an outlet to transport from the central US and Canada to the coast of the Gulf of Mexico.

A rise in Spanish and Italian bond yields had triggered speculation of a failure on the part of  Europe to rein in the debt crisis.

Analysts said the market would oscillate around $100 for some time. They said the concern in the market was centered around the contagion in Europe and prospects of its flare up.

Crude for December delivery ruled at $102.68 a barrel in electronic trading on the New York Mercantile Exchange, up 9 cents in afternoon trade, Singapore time.

Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $111.76 a barrel, down 12 cents. The European contract stood $8.99 higher than West Texas crude and the premium was the least since 8 March.

Meanwhile, in the US, in an aberration against the usual pattern, gasoline prices ruled steady even as the price of oil surged sending the benchmark crude over $100 a barrel on  Wednesday.