UPDATE 8-U.S. crude gains $1 to top $100/bbl on Cushing drawdown

Wed Mar 26, 2014 3:55pm EDT

Related Topics

* U.S. oil stocks up 6.6 million barrels last week - EIA

* Cushing stocks down 1.3 million - EIA

* Shell Nigeria declares force majeure on Forcados exports (Updates prices to settlement)

By Anna Louie Sussman

NEW YORK, March 26 (Reuters) - U.S. crude gained more than $1 per barrel on Wednesday as inventories at the future's delivery point dropped for the eighth straight week, while Brent held steady, supported by supply outages in Nigeria and Libya and tensions over Russia's annexation of Crimea.

Brent for May delivery posted a 4-cent gain to settle at $107.03 a barrel, while U.S. crude, known as West Texas Intermediate or WTI, rose $1.07 to settle at $100.26 a barrel.

The U.S. Energy Information Administration reported the eighth straight weekly draw in oil stocks at the contract's delivery point in Cushing, Oklahoma.

The 1.3-million-barrel draw at Cushing was larger than that reported by industry group the American Petroleum Institute on Tuesday, and overshadowed a larger-than-expected 6.6 million-barrel build in crude stocks nationally. Most of the build occurred in the Gulf Coast, home to nearly half of U.S. refining capacity.

"It's kind of eye-opening to see the build in the Gulf Coast, and it will offset the benefit of the Cushing draw," said Tariq Zahir at Tyche Capital Advisors in New York.

U.S. crude surged ahead of the trading session's close as it gyrated higher towards its 200-day moving average of $100.39 per barrel.

"The market's held pretty well all day, and we're right around the 200-day, so there was gravitation towards that," said Bill Baruch, senior market strategist at iitrader.com in Chicago, Illinois.

Analysts said uncertainty around ongoing delays in the Houston Ship Channel, a key waterway for supplying Gulf Coast refiners with crude oil shipments, was reflected in an unenthusiastic market.

WTI could face pressure from higher oil imports in the coming days as the Houston Shipping Channel gradually reopens following an oil spill on Saturday.

"Because the situation in the Houston Ship Channel is playing havoc with these inventories, it's going to be really difficult to get a handle on where we're at, and the market's having a hard time playing that," said Phil Flynn, an energy analyst at the Price Futures Group in Chicago, Illinois.

"I'm not seeing a lot of passion behind any of these moves."

The spread between the two crude oil benchmarks CL-LCO1=R narrowed by over $1 to settle at $6.77, from Tuesday's close of $7.80, and in from a session-high of $8.03.

Leaders of the Group of Seven major industrial powers decided this week to hold off on sanctions unless Moscow takes further action to destabilize Ukraine or other former Soviet republics.

On Wednesday, the United States and the European Union agreed to work together to prepare possible tougher economic sanctions on Russia, including in the energy sector, and to make Europe less dependent on Russian gas.

Royal Dutch Shell declared force majeure on Nigeria's Forcados crude exports on Tuesday due to a pipeline leak caused by oil theft, while Libyan output fell by about 80,000 barrels per day to around 150,000 bpd after the closure of a large oilfield.

Shell has not said when repairs would be completed but that it would reopen the export line as soon as possible. Nigeria's exports of crude oil in May look set to fall to 1.53 million bpd, their lowest since records began in 2009, a partial loading program indicated on Wednesday.

U.S. durable goods orders rose 2.2 percent in February, topping expectations for a 1 percent rise, and boosting the outlook for the world's largest economy. (Additional reporting by Elizabeth Dilts in New York, David Sheppard in London, Keith Wallis in Singapore and Erwin Seba in Houston; Editing by William Hardy and David Gregorio and Marguerita Choy)

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