US oil futures traded above the price of the global oil market benchmark Brent crude for the first time in 33 months on Friday, as signs of strong demand from US refiners encouraged spread trading and bets the era of the US discount was ending. While prices on both sides of the Atlantic fell in the session, Brent ended with a loss while NYMEX West Texas Intermediate crude climbed in the final minutes of trade to close higher. In early afternoon trade, US crude for September delivery reached a 5-cent premium over Brent in heavy trading volume. The spread then reversed, with US crude moving back to a slight discount to the European benchmark crude. The last time WTI traded above Brent was October 2010, but historically it was often the higher price and served as the world benchmark. As recently as February of this year, Brent traded at a $23 premium to US crude. "It was kind of a historic moment, really. It's come a long way so fast," said Phil Flynn, energy analyst at the Price Futures Group in Chicago, Illinois. "I think the trend is going to continue because the quality of US crude is high, and it's coming from a country that's a major user of oil with an economy that's doing better than the alternatives right now." Both crudes reversed earlier gains as traders booked profits ahead of the weekend and some of the longs in the market trickled out. The losses followed a three-week-long rally in which both benchmarks topped $109 a barrel and hedge funds and speculators built their most bullish position since the Libyan civil war. "Traders who bought the breakout at $108 don't want to get too piggish, so you've got some profit-taking and you've got some shorts trying to get into the market," said Richard Ilczyszyn, chief market strategist at iitrader.com. Brent for September fell 63 cents to $108.07 a barrel, after hitting $109.18 earlier in the session. August US crude hit a 16-month high of $109.32 earlier in the day and settled at $108.05, up 1 cent. US oil for September delivery ended up 6 cents at $107.87 a barrel. The convergence of the two front-month crude benchmarks comes as increased pipeline capacity has drained a glut of oil at the WTI delivery point of Cushing, Oklahoma to the US Gulf Coast where refinery demand has been high. Stocks at Cushing have fallen to 46 million barrels from 52 million in January. Refiners, enjoying bumper profit margins on export sales, are running their hardest since 2005, drawing down US crude inventories at the fastest rate on record. On the Gulf Coast, refinery runs averaged nearly 8.5 million bpd, the highest level on US government records dating back to 1992, and up nearly 400,000 bpd from June 14.

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