Brent futures were subdued below $110 on Thursday, having hit a four-month low earlier, while U.S. crude was supported by hopes that reversing flow on the Seaway oil pipeline would help reduce a supply glut at the land-locked delivery point at Cushing, Oklahoma. Brent crude futures seesawed between negative and positive territory. Brent was down 4 cents to $109.71 a barrel by 0929 GMT, having hit $109.01 earlier, the lowest intraday price since January 25. U.S. crude was up 26 cents to $93.07. Analysts said the expected reversal of the Seaway pipeline on Thursday supported U.S. crude, piping oil from Cushing in Oklahoma, the delivery point for U.S. crude, to Houston, which is the country's main refining centre on the Gulf Coast. "The Seaway pipeline reversal starts today and this could support WTI," said Yusuke Seta, a commodity sales manager at Newedge Japan. He was referring to West Texas Intermediate, or WTI, an underlying crude for U.S. crude futures. VOLATILE SPREAD Brent's premium on U.S. crude, or Brent-WTI spread, fell to a six-week low of $15.48 a barrel, after widening to one-month high of $19.46 on Wednesday. Mark Thomas, head of energy Europe with brokerage Marex Spectron, expected the spread to remain volatile. He added the Seaway reversal might to be too small to clear supply overhang in the United States. "I do not believe the reversal will be enough to counter the inflow of extra crude going into Cushing from Canada and the rest of the U.S.," Thomas said. U.S. crude inventories rose to their highest level in 21 years last week, U.S. government data showed on Wednesday. Brent briefly turned positive following the smooth sale of 2.5 billion euros in Spanish bonds. But weak investor sentiment in Europe also weighed down Brent, the euro and European shares due to concerns over the potential for Greece to exit the euro zone. Talk of an emergency stock release capped any gains in oil prices. Kyodo news agency reported that U.S. President Barack Obama had moved to seek support to tap emergency oil reserves from other Group of Eight leaders at a summit this weekend before the European Union's July embargo of Iranian crude. The International Energy Agency remained ready to release emergency oil stocks if needed as oil prices remained a threat to the fragile global economic recovery despite a recent fall. IRAN The oil market showed limited reaction to potential tightening of U.S. sanctions against Iran and remarks from the U.S. ambassador to Israel. The ambassador said U.S. plans for a possible military strike on Iran are ready and the option is "fully available". Iran is due to resume talks with world powers next week over its disputed nuclear programme.

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