* Cushing sees 2.6 mln barrel draw - EIA
* China's crude oil imports rise to record high in January
* Libyan protests set floor under Brent
(Adds analyst's quote, updates prices to settlement)
By Elizabeth Dilts and Jeanine Prezioso
NEW YORK, Feb 12 U.S. oil settled at a
four-month high on Wednesday supported by expectations that
one-time landlocked oil at the U.S. contract's benchmark
delivery point would continue to flow to Gulf Coast refineries
after government data showed a large drain in supplies there.
The U.S. oil futures contract traded above $100 per barrel
for the entire session for the first time since Oct. 18, and
settled at its highest point since then, after data showed
TransCanada Corp's Gulf Coast pipeline began in earnest
to drain oil from benchmark delivery point Cushing, Oklahoma.
U.S. oil stranded at Cushing has depressed prices for the
last three years.
Doubts over whether that oil would be consumed by refiners
or whether the pipeline would simply displace the glut capped a
gain in prices after the same data showed a larger than expected
build in overall crude inventories. Expectations for dwindling
seasonal demand for heating fuels also helped curb gains.
Demand for crude was also expected to decrease as refiners
head into maintenance season.
Brent ended moderately higher, pressured as traders sold the
European benchmark and bought WTI after the data were released.
Brent drew support from a stronger 2014 oil-demand forecast from
OPEC and Chinese data released late Tuesday that showed oil
imports hit record highs.
The closely traded Brent/WTI spread dipped below $8 at one
point and narrowed to settle at a four-month low at $8.42.
Market watchers broadly expected the spread to tighten as
supplies drain from Cushing, even as the approach of refinery
maintenance season will weigh on U.S. oil futures and slightly
widen the gap between the two oil benchmarks longer term.
"As we ramp up production and any pipeline to the Gulf,
that's going to contract the spread even more," said Richard
Ilczyszyn, chief market strategist and founder of iitrader.com
in Chicago, Illinois. "Ultimately, whatever short-term widening
we have because of refinery maintenance, it's going to narrow
Brent crude for March delivery ended 11 cents higher
at $108.79. U.S. crude settled 43 cents higher at
$100.37, after trading as high as $101.38.
Traders who bought contracts to cover short positions
contributed to Brent's small gains, analysts said, as the
front-month March contract expires on Thursday. Brent oil for
April delivery settled 17 cents higher at $108.35.
Investors have been tracking declines in distillates, which
include heating oil and diesel, of more than 1 million barrels
for each of the last four weeks of January as refiners have been
pumping out heating fuel to warm homes and businesses amid
record cold weather.
This week's report showed somewhat of a slowdown.
Distillates fell by a less than expected 731,000 barrels in the
week to Feb. 7, data from the U.S. Energy Information
Administration showed on Wednesday.
U.S. ultra-low sulfur diesel (ULSD), commonly known
as heating oil, ended 1.56 cents lower at $3.0125 per gallon.
U.S. crude oil inventories rose by 3.3 million barrels, more
than expected in a Reuters poll, the EIA data showed. The build
came in spite of a 2.6 million barrel draw in Cushing stocks.
Gasoline fell by 1.9 million barrels compared to estimates
for a 100,000 barrel draw. U.S. RBOB gasoline futures
settled 1.05 cents higher at $2.7631 per gallon.
Brent trading was focused in part on crude oil imports in
China, the world's second largest oil consumer, which rose 11.9
percent in January from a year earlier.
The potential for further supply interruptions from Libya
set a floor under Brent prices. Libyan protests once again shut
pipelines from the Wafa oilfield in the west of the country and
are threatening to block another line from the El Sharara field.
OPEC raised its 2014 outlook for world oil demand by 40,000
bpd, becoming the second major forecaster this week to predict
higher fuel use.
(Additional reporting by Lin Noueihed in London and Jacob
Gronholt-Pedersen in Singapore; Editing by Alden Bentley and