(Corrects headline to say premium at 8-month low, not high)
* Brent-U.S. crude spread falls to lowest since July
* U.S. crude at highest in more than a month
* U.S. home sales post biggest rise in 6-1/2 years
* Coming Up: API oil inventory data; 2030 GMT
By Simon Falush
LONDON, March 26 Oil rose on Tuesday, lifted by
strong housing data in the United States, while Brent's premium
to U.S. crude fell to its lowest in more than eight months as
higher shale oil supply reduced the U.S. need for imports.
U.S. single-family home prices rose in January, the biggest
annual increase in six-and-a-half years, helping bolster the
demand outlook in the world's largest oil consumer.
"Solid housing data showing rising home prices pointed to a
U.S. economy that continues to rebound, helping boost U.S.
crude," said John Kilduff, partner at Again Capital LLC in New
The premium over U.S. light crude of Brent, the predominant
global oil price benchmark based on North Sea crudes
CL-LCO1=R, was at $12.77 at 1336 GMT, down from as high as
$23.45 in February.
The premium has dropped around 34 percent so far in March,
its biggest such fall since November 2011.
Brent crude futures rose 22 cents to $108.17 a
barrel, in the middle of the $107 to $109 range of the past two
U.S. crude gained 81 cents to $95.62, having hit its
highest level since Feb. 19.
The U.S. housing figures highlighted the contrasting
fortunes of economies on either side of the Atlantic, with
investors fretting that debt problems afflicting euro zone
countries are far from over after Cyprus banks were bailed out.
"The economic position in the U.S. looks better than in
Europe," said Olivier Jakob, analyst at Petromatrix in Zug,
Supply issues were at the heart of the strength of U.S.
crude relative to Brent.
"The erosion (of the premium) is because U.S. shale
production is decreasing imports of light sweet crude grades,"
said Seth Kleinman, head of energy research at Citigroup.
Kleinman said the spread could reach as low as $10 per
barrel but was unlikely to shrink much further because of
difficulties in getting U.S. oil supplies to the East Coast and
the Gulf of Mexico.
Problems in the euro zone continued to brake gains.
The president of Cyprus assured citizens their best
interests had been served by an 11th-hour deal with the European
Union, the European Central Bank and the International Monetary
Fund to shut the country's second-largest bank in return for 10
billion euros ($13 billion) in rescue funds.
Cyprus banks will be closed until Thursday and will then be
subject to capital controls to prevent a run on deposits.
Brent pushed in mid-February above $119 a barrel to its
highest level this year before dropping back due to economic
concerns and improving North Sea supply.
U.S. commercial crude oil stockpiles are forecast to have
increased by 1.1 million barrels last week on an expected rise
in imports, ahead of weekly industry data later in the day, a
preliminary Reuters survey of analysts showed on Monday.
(Additional reporting by Robert Gibbons in New York; Editing by
Anthony Barker and Alison Birrane)