* Brent-US crude spread hits narrowest since September
* Saudi says no change in output policy
* Coming up: Fed Chair Bernanke speaks, 4:00 p.m. EST Monday
(Rewrites throughout, adds settlement prices, US oil inventory
By David Sheppard and Robert Gibbons
NEW YORK, Jan 14 Brent crude oil rose by more
than 1 percent toward $112 a barrel on Monday, boosted by a weak
U.S. dollar, strength in gasoline and diesel markets, and as
investors weighed a statement from Saudi Arabia disputing claims
it has altered its output policy.
Traders also eyed the start-up of a key pipeline expansion
in the United States, which should help reduce the glut of crude
oil that has depressed benchmark U.S. prices in the Midwest
relative to international rivals.
After last week's news that Saudi Arabia's crude output fell
in December, a senior Saudi oil ministry adviser told the state
news agency that the kingdom cut oil production because of lower
Tim Evans, an analyst at Citi Futures Perspectives in New
York, said the Saudi statement had given traders "assurances
that Saudi Arabian production cuts were not a bid to push prices
higher," keeping the $100 price target announced last January.
Nevertheless, with Brent crude oil already above $110 a
barrel, traders added to price gains on Monday as U.S. gasoline
and heating oil futures gained on a series of refinery outages
over the weekend.
Oil analysts also noted that the dollar index fell on
comments from regional Federal Reserve presidents that they will
continue accommodative monetary policies to boost the economy.
Brent February crude, which expires on Wednesday,
rose $1.24 to settle at $111.88 a barrel, having seesawed either
side of the 100-day moving average at $111.02. The Brent
contract for March delivery rose $1.11 to $110.95 a barrel.
U.S. February crude rose 58 cents to settle at
$94.14 a barrel, having swung from $92.95 to $94.29.
Brent's premium to U.S. crude CL-LCO1=R widened to around
$17.70, reversing course after it narrowed to a four-month low
of $16.69 in early trade.
On Friday, the Brent premium briefly narrowed to less than
$17 a barrel for the first time since September. It is down from
more than $26 in November, helped by last week's start-up of the
expanded Seaway pipeline that will carry up to 400,000 barrels
per day of crude away from Cushing, Oklahoma, delivery point for
the U.S. contract.
U.S. RBOB gasoline futures rose by almost 0.5 percent
to above $2.75 a gallon while heating oil rallied almost
2 percent to above $3.06 a gallon.
Crude and refined product stocks were forecast to have risen
in the United States last week, a preliminary Reuters poll
showed, with crude oil inventories expected to have risen by 2
million barrels, gasoline by 3.1 million barrels, and
distillates - which include heating oil and diesel - by 1.6
Wall Street was lower after shares of Apple were hit by
demand concerns, while investors faced a busy week for earnings
in what is expected to be a lackluster quarter. Concerns about
raising the U.S. debt ceiling also applied pressure on oil and
stock markets, brokers and analysts said.
President Barack Obama said on Monday he would be willing to
take over authority for raising the U.S. borrowing limit if
Congress does not want to increase the debt ceiling.
Obama was asked at a news conference about differences he is
having with congressional Republicans over raising the $16.4
trillion debt ceiling that the country is expected to hit as
soon as the middle of next month. He warned it risked tipping
the U.S. economy into recession.
"This is about paying your bills," he said. "We've got to
stop lurching from crisis to crisis to crisis."
Republican congressional leaders on Monday repeated their
demand that increases in U.S. borrowing authority must be
accompanied by spending cuts.
(Reporting by Robert Gibbons in New York, Alex Lawler in London
and Manash Goswami in Singapore; Editing by Dale Hudson, Bob
Burgdorfer and David Gregorio)