Brent crude futures rose USD 2.55 to settle at USD 125.43/bbl, recovering back above the 30-day average at USD 124.25 after slumping to USD 121.70. NYMEX crude futures gained USD 2.21 to settle at USD 105.23/bbl, after slipping to USD 102.06. Brent's premium to WTI widened to USD 20.20/bbl. Oil prices rose a second day on Monday, gaining 2% on a better-than-expected ISM manufacturing reading as strength in the US economy continues to offset deteriorating conditions in Europe and concerns over China's slowdown. The Institute for Supply Management's index of US factory activity rose to 53.4 in March from February's 52.4, outpacing economists' expectations and keeping the reading above 50, which points to expansion in the sector. The upbeat data propelled US equities higher, with the S&P 500 index reaching a four-year peak. Also on the bullish side, loading delays for North Sea crude cargoes compounded worries about global supply disruptions news that BP had shut in oil output at the Valhall platform last week for compressor maintenance and that according to trade sources, the shutdown would delay loading of seven North Sea Ekofisk cargoes in April. Oil recovered after being pressured by news the Eurozone's manufacturing sector contracted for an eighth month and at a faster pace in March, according to Markit's Eurozone Manufacturing Purchasing Managers' Index. The impact from the European figures was mitigated by data showing China's big factories operated at a faster-than-expected pace in March, though smaller manufacturers were less successful. On the geopolitical front, Iran and six world powers are scheduled to meet in Istanbul, Turkey on April 13-14 for a new round of talks on Tehran's controversial nuclear program. The last talks of such talks were held in Turkey in January 2011, and broke down without any commitments to hold another round. We tend to believe this year’s talks will be a repeat performance of last year’s ‘dialog of the deaf’ as the intransigent statements on both sides have underscored in recent months and as reiterated in yesterday’s remarks by Iran’s foreign minister Ali Akbar Salehi: "The West thinks that Iran, like many other countries, will surrender under pressure from the US, but this belief is wrong. Sanctions create minor problems for us but we will continue on our path." While potential interruptions to Iranian supply and bans because of sanctions have been the primary concern, actual supply has been cut in Syria, Yemen and South Sudan. On Sunday, Sudan and South Sudan accused each other of launching attacks in the oil-producing area straddling their border. Saudi Arabia is pumping almost 10 mn bpd, the highest in decades, and insists there is no shortage of supply. France’s Comite Professionnel des Stocks Strategiques Petroliers said it has not been asked to prepare for a release of emergency oil reserves, according to Platts agency. We still think the US and its allies will make an attempt to release strategic petroleum reserves most likely around the end of June to counter the effect of the EU embargo on Iranian oil which is set to take effect on July 1. Moving forward, we think the mid-week inventory report will again curb price growth, as has been the case largely in recent weeks. This week US crude stocks are expected to have risen last week, while distillate and gasoline stocks will likely show drawdowns. In the upshot, Brent looks comfortable in the USD 122-126 range, while WTI looks range-bound around USD 102-106.