Major Canadian pipelines that move almost 1 million barrels per day (bpd) of Alberta oil sands crude remained shut on Monday after a spill on a smaller line was discovered over the weekend, a spokesman for operator Enbridge Inc said.
The threat to Canadian exports overshadowed fears that a credit crunch in China could hit demand in the world's No. 2 oil consumer, which sent Brent beneath $100 a barrel overnight, extending a near-5-percent slide last week.
The U.S. West Texas Intermediate (WTI) benchmark had the bigger bounce - more than $3 a barrel off a trough of $92.67, the lowest since June 4. WTI's discount to Brent fell to its lowest since November 2011. The Brent-WTI spread, as it's known by traders narrowed to as little as $5.91 a barrel.
U.S. crude for August delivery settled up $1.49 at $95.18 a barrel, rallying off of a three-week low of $92.67.
CHINA AND US FED ROIL MARKETS
Trade in Brent was choppy as investors weighed whether a near $6 sell-off in ten days was overdone. Lingering fears that a liquidity crunch in China and the potential withdrawal of monetary stimulus from the U.S. Federal Reserve could hit the world economy and lower oil demand have pressured prices.
China's central bank said on Monday the overall liquidity in the financial system was at a reasonable level after interest rates for short-term funds last week rose to extraordinary levels as big commercial banks held back on lending in the interbank market.