Brent crude futures rose on political tension in the Middle East and widespread rumours that Saudi King Abdullah was seriously ill or may even have died.
While there was no confirmation of the report by a Middle Eastern news organisation that the Saudi king died on Wednesday,
Brent prices surged by over $1 to $102.88 a barrel.
The premium for Brent crude over U.S. West Texas Intermediate (WTI) pushed to a fresh record on Thursday above $16 a barrel as a greater-than-expected stockbuild in the United States the previous day dampened Nymex prices.
ICE Brent rose 55 cents to $102.37 a barrel at 1055 GMT, while U.S. crude for March slipped 21 cents to $86.5 a barrel.
"Stocks in the mid-continent are very high in the U.S., and that is isolating the WTI from geopolitical risk, while Brent is
responsive to what is happening in the Middle East," said Christophe Barret, an oil analyst at Credit Agricole Corporate
and Investment Bank.
U.S. gasoline stocks reached a 20-year high last week, surpassing analysts' estimates and raising concerns about oil
product margins further into the year.
"This is problematic now for the U.S., because from the second quarter of 2011, all the market will rely on gasoline for
margins, and basically with the gasoline situation now I think it looks a bit dangerous," Barret continued.
Oil demand was forecast to hit a record 90 million barrels a day by the fourth quarter of 2011 as the International Energy
Agency (IEA) raised consumption growth forecasts for the year.
But the agency also said that rising OPEC production and comfortable oil stocks in developed economies should limit a
further spike in oil prices, even with demand hitting an all-time high this year.
Despite mixed signals, the higher demand growth forecast ultimately supported prices amid concerns unrest in the Middle
East could intensify or spread to neighbouring countries.
"It's a robust report ... If you look at their communique it's a very clear message that yes the market tightened quite a
bit in 2010."," said Amrita Sen, an analyst at BarCap.
Investors were concerned that unrest in Tunisia and Egypt could ignite similar protests in bigger oil producers such as
Libya -- or even Saudi Arabia.
Egypt has plunged into in political turmoil since Jan. 25, and the government of embattled Egyptian President Hosni Mubarak
has accused the United States of attempting to impose American will on a loyal Middle East ally, saying rapid reforms would be
Four people were killed and several suffered gunshot wounds in clashes between security forces and some 3,000 protesters in
a desert province far from Cairo on Tuesday and Wednesday.
It appeared to be the most serious such clash with official forces since Jan. 28, when police all but disappeared from Egyptian streets after they had beaten, tear gassed and fired on protesters.
The spread between the two crude oil benchmarks will likely stay wide apart for some time as the tension in Egypt and
tighter European supplies will drive Brent prices up at a much faster pace versus WTI, analysts say.
"The spread between Brent and WTI is very huge at the moment, but this is due to the fact that there are more supplies
in America versus Europe," said Le Brun.