By Barani Krishnan
NEW YORK (Reuters) - Brent crude futures fell for a fifth straight day on Tuesday to end below $60 a barrel while U.S. crude finished a volatile session slightly higher as trading of expiring options helped defend the price above $55.
Early in the session, prices slid more than $2 barrel as major oil producers said they were in no rush to cut production and curb a growing glut.
While both markets rebounded from session lows, U.S. crude saw frenzied trading that pushed it up more than $1 at one point as players sought to defend prices at around the $55 mark to avoid executing options that expire in-the-money.
Traders also cited a selloff in gasoline/heating oil crack spreads, which they said bolstered U.S. crude.
Some said prices were supported by forecasts for a drop of U.S. crude oil stockpiles last week. Trade group the American Petroleum Institute will release preliminary inventory data at 4:30 p.m. EST (2130 GMT) .
Brent also pared losses as traders tried to keep the value of its expiring front-month contract, January, close to the nearby February, which will be the market's benchmark from Wednesday.
Brent's front-month settled down $1.20, or nearly 2 percent, at $59.86 a barrel. Its session low of $58.50 was the lowest since July 2009. The contract has lost more than 10 percent in five days of trading.
U.S. crude's front-month finished up 2 cents at $55.93 a barrel. Its session low of $53.60 was the lowest since May 2009.
The price spread between the two, a favorite arbitrage for oil traders, narrowed to below $4 a barrel from the one-month high above $5 in Monday's session.
Oil prices were driven down in early trade by Russia's emergency rate hike in a failed attempt to stabilize the rouble, and by decision by Russia, the world's largest oil producer, not to cut its oil output.
Oil has tumbled 50 percent since June when Brent traded above $115, and is headed for its biggest annual decline since 2008.
Many traders and analysts said the market is possibly oversold, but they cannot predict when it will begin picking up.
"Prices will ... bottom when they start to impact supply. Nobody can tell you at what price level this will be, to be honest," Carsten Fritsch, senior oil and commodities analyst at Frankfurt's Commerzbank, told the Reuters Global Oil Forum.
Commerzbank expects more volatility in the first half of 2015 before a recovery over the next six months, he said. "The key is non-OPEC supply, (that's) where the rebalancing of the oil market must come from."
(Additional reporting by Catherine Ngai in New York, Alex Lawler in London and Henning Gloystein in Singapore; Editing by Jason Neely, Michael Urquhart, David Gregorio and Meredith Mazzilli)
