* Brent-WTI spread narrowest in more than two months
* U.S. Q4 2013 GDP rises at 3.2 percent annual rate
* China slowdown caps Brent gains
By Elizabeth Dilts
NEW YORK, Jan 30 U.S. crude oil rose nearly $1
on Thursday on spread trading and higher demand as blistering
cold sapped distillate supplies and government data showed solid
economic growth in the fourth quarter last year.
The price difference between the European benchmark Brent
and U.S. crude oil settled at its narrowest point in more than
2-1/2 months, after news that U.S. gross domestic product grew
by a 3.2 percent annual rate, according to the U.S. Commerce
Also supporting U.S. crude oil were expectations that the
southern leg of TransCanada Corp's Keystone pipeline
has begun to drain major amounts of oil from the hub at Cushing,
Oklahoma, where the contract is priced.
Brent crude rose on concerns over supply interruptions from
Libya. However, growing evidence of a fuel demand slowdown in
the second-biggest oil consumer, China, capped gains.
BP announced Thursday it dropped plans to invest in a
refinery in China, as Royal Dutch Shell did late last
year. And violence in Libya threatened to destabilize the oil
exporter again after an attempted assassination nearly took the
life of the deputy prime minister.
"A lot of the strength is coming from the spread markets,
and that leads us to believe there's a strong demand for March
U.S. crude," said Joseph Posillico, senior vice president of
energy derivatives at Jefferies Bache in New York. As well
"there are expectations that Cushing could show some significant
U.S. crude oil futures settled 87 cents higher at
$98.23, after reaching a session high of $98.59, its highest
since Jan. 2.
Brent crude rose 10 cents higher to settle at
$107.95 a barrel. Brent's premium to U.S. crude narrowed 77
cents to $9.72, the lowest settlement price since Nov. 7.
U.S. ultra-low sulfur diesel (ULSD), commonly known
as heating oil, was up nearly four cents to $3.2206 per gallon.
U.S. government data released Wednesday showed a steep decline,
the third in as many weeks, in distillate inventories, which
include heating oil.
U.S. DATA RESONATES
Consumer spending was the main driver of U.S. fourth-quarter
GDP growth, but there was also a strong boost from trade.
Business investment also lent support as did the restocking of
warehouses but not at the same scale as in the third quarter.
The advance fourth-quarter GDP was released a day after the
Federal Reserve announced it would further taper the size of its
stimulus program because "growth in economic activity picked up
in recent quarters."
A pullback in stimulus is expected to strengthen the dollar,
which typically weighs on dollar-priced commodities such as oil.
"The Fed is talking about strong economic fundamentals,"
said Richard Hastings, a strategist at Global Hunter Securities.
"For commodities, trade is stable and as long as exports
continue to hang out and drift higher, the underlying
commodities price remains bullish."