* U.S. crude oil up on expected draw in inventory stocks
* Brent slips amid easing concerns internationally
* Traders move to narrow spread between U.S. crude and Brent
* Cushing stocks likely to rise this week, but effects
(Adds analysts quotes, background on inventory expectations and
By Catherine Ngai
NEW YORK, Aug 11 U.S. crude oil edged up on
Monday on an expectation of further draws in U.S. crude
inventory, while Brent trended down despite a number of
Brent was weaker despite a number of geopolitical risks
carrying over from last week, including President Barack Obama's
authorization for the first U.S. air strikes on Iraq since he
pulled all troops out in 2011..
Meanwhile, expectations of a draw in U.S. oil stocks
supported the higher U.S. crude prices. Traders and
analysts are expecting an increase in oil stocks at the Cushing,
Oklahoma delivery hub when government data is released later
However, the increase is likely to be short-lived as a
number of refineries are coming back online, such as CVR
Refining LP 's Coffeyville, Kansas, plant, which will
draw down stockpiles.
"U.S. crude closing on Brent is the story, but it's not that
big of a surprise because the Kansas refinery should be coming
back online in a week or two," said James Williams, an energy
economist at WTRG Economics in London, Arkansas. "Traders are
anticipating that any build in Cushing inventory will be
temporary or minimal at best."
By 2:30 p.m. (1830 GMT), U.S. crude increased 43
cents to settle at $98.08 a barrel, while Brent slipped
34 cents to settle at $104.68 a barrel.
Much of the movement was a result of traders trying to
narrow Brent's premium over U.S. crude CL-LCO1=R, which
widened to as much as $8.10 on Thursday, the most since the end
"I don't think the Brent premium (to U.S. crude) above $7.50
is sustainable," said Richard Hastings, a macro strategist at
Global Hunter Securities in Charlotte, North Carolina.
"Generally speaking the Brent premiums should stay within $4 to
$6 a barrel."
On the international front, Iraq's president asked the
Shi'ite coalition's nominee for prime minister to form a
government, challenging incumbent Nuri al-Maliki, who has vowed
to seek a third term.
NATO chief Anders Fogh Rasmussen told Reuters in an
interview he saw a "high probability" that Russia could
intervene militarily in eastern Ukraine and that NATO detected
no sign that Moscow was pulling back its forces from close to
Russia has massed 45,000 troops on its border with Ukraine,
backed by an array of heavy equipment, according to a Ukrainian
Although the market did not respond quickly to the news,
others reasoned the market may be trying to find its bearings.
"I think the whole market is rallying as the geopolitical
landscape is continually shifting," said Ed Kevelson, head of
U.S. Energy OTC at Newedge. "Every time traders think those
risks are off the table or not germane, something pops up."
(Additional reporting by Jason Neely in London, Florence Tan
and Theodora D'cruz in Singapore; Editing by Marguerita Choy,
Jessica Resnick-Ault and Steve Orlofsky)