Brent crude edges higher

Brent crude edged higher Friday after Spanish measures to address its economic frailty helped to reverse some of the deep sell-off triggered by concern the world is heading back into recession. Brent was 32 cents higher at $107.31 a barrel by 1336 GMT, just off a brief peak of $108.34 and well clear of a session low of $105.06. US crude shed 79 cents to $81.59 a barrel, up from a low for the day of $79.17. The US contract\'s discount to Brent sagged to a new record of well over $25 a barrel. Article continues below Downbeat mood Traders linked the modest recovery in Brent to attempts by Spain to stimulate growth announced Friday, which also pushed the euro higher, while the US dollar weakened. But traders and analysts also said the mood was still downbeat. \"This short-term downturn is not done yet. It could take WTI (US crude) to as low as $75. The fundamental picture is not that bad, but if the overall economy remains weak, it is very hard to make a case for a bull run in oil,\" said Tony Nunan, a risk manager with Mitsubishi Corporation in Japan. \"What could turn the situation around is if Opec tightens supply. The question is at what price trigger it will do that.\" Brent has slipped by around 10 per cent so far this month, the most since a 15 per cent drop in May 2010. Technical analysis based on charting previous market performance pointed to the potential for further falls. For Brent, the near-term technical target on the downside was $105.24 per barrel, briefly broken Friday, while strong bearish momentum could push US crude to $78.85 per barrel, said Reuters market analyst Wang Tao. This month\'s drop in oil prices has coincided with a wider market sell-off as investors have fled riskier assets for safer havens, such as gold, which has scaled a series of records. The Reuters-Jefferies CRB, a global benchmark for commodities, fell more than 2 per cent on Thursday — its largest daily decline since August 8, when energy, metals and agricultural markets slumped following the Standard & Poor\'s downgrade of the US triple-A credit rating. A deep sell-off on Thursday and early yesterday took its cue from US data that showed factory activity in the US Mid-Atlantic region in August fell to the lowest level since March 2009. An unexpected fall in existing US home sales in July and a greater-than-expected rise in new claims for jobless benefits in the latest week added to anticipation that the US economic recovery could stall and slide into recession.