LONDON--Crude oil futures rebounded Monday after several price-supporting factors came into play, but analysts suggest that further price falls are likely in the coming days.
At 0900 GMT, the May Brent contract on London's ICE futures exchange was at $105.10, up 98 cents or 0.0.9%. Nymex light, sweet crude for May delivery was up 66 cents, or 0.7%, at $93.36 a barrel.
Higher crude futures prices evidence an "inevitable rebound" after the heavy losses seen last week, according to Bjarne Schieldrop, analyst at SEB Commodity Research.
Mr. Schieldrop cited supporting factors to the Brent price -- a rebound in European equity markets points to a more favorable trading environment; tension in other oil-producing regions, including reported attacks by Nigerian rebel group MEND; and a lack of progress on talks with Iran over its nuclear policy.
However "some more softness" is likely, Mr. Schieldrop said: "[This is] a rebound before a further sell-off...[with oil] testing the $100 level" within the next weeks.
The Brent crude market structure showed some signs of a change as the front two months moved into contango, with June crude more expensive than oil for May delivery . This came close to happening on Friday, according to the Schork Report, "the first time the front of the Brent term traded at a discount since last June."
Analysts at Morgan Stanley suggested that the move into contango could foreshadow a narrowing of the price gap between Brent and U.S. WTI crude, but predicted that this would be temporary:
"When Brent last went into contango in June 2012, WTI-Brent reached $11 a barrel before widening again as the Brent market firmed. Given our view that the latest bout of Brent weakness will reverse over the second quarter 2013...WTI-Brent will likely widen as well," they wrote in a note.
At 0816 GMT the Brent-WTI spread was at $11.77.
Morgan Stanley added: "If WTI-Brent does continue to hover around the $10-11/bbl range, economics will likely drive greater rail volumes into Cushing before there is adequate takeaway capacity, putting pressure on WTI."
At 0900 GMT, the ICE's gasoil contract for April delivery was up $3.50, or 0.4%, at $883.50 a metric ton, while Nymex gasoline for May delivery was up 259 points, or 0.9%, at $2.8895 a gallon.
