Brent up to $61, First Monthly Gain Since July

Brent premium over U.S. crude widens to $12; China's implied oil demand set to grow 3 percent this year.

Crude oil futures rebounded on Friday and Brent headed for its first monthly gain since July, helped by strong investor inflows, an improving demand outlook and supply outages.

At 1148 GMT, Brent crude futures were up 92 cents at $60.97 a barrel, off an earlier high of $61.75. U.S. crude was up 78 cents at $48.95 a barrel. Both contracts tumbled on Thursday, with U.S. crude falling hardest.

Brent is trading at a premium of about $12 to U.S. crude, which remains hamstrung by massive inventory builds. This is the widest spread since January 2014.

"The main event this week has been the widening of the spread between Brent and WTI (U.S. crude)," Ole Hansen, senior commodity strategist at Saxo Bank, said. "WTI is still only a few dollars above the lows, but Brent has lifted off."

Brent is up around 15 percent this month from January's close of $52.99, on course for its biggest monthly gain since May 2009. U.S. crude is also set for its first monthly rise in eight, but with a modest gain of about 1.9 percent.

Brent is being helped by positive euro zone and Chinese data, plus supply disruptions in Libya, said Hans van Cleef, energy economist at ABN Amro.

China's implied oil demand is set to grow by 3 percent this year, the country's top energy group China National Petroleum Corp said.

Disruptions to production and exports from Libya and Iraq in recent weeks have contributed to tightness in the physical market in the Mediterranean, while in the North Sea, Statoil has shut its Statfjord C platform after discovering cracks in the flare tower.

But analysts at JBC Energy warned that supply-side support could wane in coming weeks. "Many of the outages that we have witnessed of late appear bound to come back next month," they said in a note.

The latest Baker Hughes rig count number will emerge later on Friday, providing an update on how the U.S. shale industry is responding to lower oil prices.

But analysts said much of the move up in Brent was speculative and fundamentals could not explain its relative strength given that the market remains oversupplied.

"The market is searching for a new balance, or a fair price, as OPEC would call it," van Cleef said. "We are seeing a lot of speculative trading and prices can rise or fall 2 or 3 percent on a daily basis based on nothing."
 

By Claire Milhench