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US oil rises as spread with Euro benchmark narrows

US oil prices jumped Monday as the spread between US and European oil contracts receded from a recent peak.

West Texas Intermediate settled on the New York Mercantile Exchange at $97.03 a barrel, up $1.31 compared with the Friday level.

In London, Brent North Sea crude for delivery in March closed at $118.13 a barrel, down 77 cents from Friday.

Bart Melek, an analyst at TD Securities, said traders concluded that last week's surge in Brent was more extreme than warranted. Investors have been closely eying the spread between the US and European oil contracts.

"A lot of it has to do with the fact that Brent likely had outstripped the WTI and WTI is looking at it and trying to catch up a little bit," said Melek. "The differential got too wide and got ahead of itself."

Traders have become "concerned that the Brent-WTI spread may have reached an unsustainable level after posting the highest settlement since November 28 on Friday," said analyst Tim Evans of Citi Futures.

The Brent contract on Friday reached a nine-month peak at $119.17 a barrel on healthy economic data and geopolitical concerns after crude producer Iran rejected a US offer on nuclear talks, traders said.

WTI for its part has also suffered as US stocks have risen almost 12 million barrels the last three weeks.

The buildup has come amid operational problems at the much-watched Seaway pipeline, which delivers oil from the trading hub of Cushing, Oklahoma to terminals on the Gulf of Mexico coast in Texas.