* U.S. crude oil futures hit eight-month low
* Supply concerns over North Sea oilfield output assuaged
* Brent premium to WTI highest since early December
* U.S. jobless claims fell last week
* Coming up: U.S. non-farm payrolls data on Friday
(Updates to settlement prices, adds U.S. oil touches an
eight-month low, adds analysts' quotes)
By Elizabeth Dilts
NEW YORK, Jan 9 Oil futures prices on both sides
of the Atlantic fell by more than $1 on Thursday, driven by
ballooning stocks of heating fuels.
The market pared losses just ahead of the session close as
traders focused on Libya's resolve to get oil exports on track,
which would further dampen prices and bought back contracts to
cover short positions.
Unrest at Libyan ports seized by protesters has capped
losses in Brent, though some traders say they anticipate exports
from those ports to resume by the weekend.
Warmer weather in the U.S. has eased prices for heating
fuels following record-breaking arctic temperatures at the
beginning of the week.
U.S. heating oil futures and London gas oil futures
fell to their lowest since mid-November, weighing on
crude oil prices. As well, U.S. natural gas futures
prices sank 5 percent to below $4 per million British thermal
units. Gas is used to heat the bulk of U.S. homes in winter.
"You have a stronger dollar, no geopolitical stress, a break
in the weather and builds in heating oil and gasoline," said
Rich Ilczyszyn, chief market strategist at iitrader.com in
"All that is leading oil down."
The U.S. dollar index rose to its highest since
mid-November on Thursday, weighing on oil prices. A stronger
dollar means that commodities priced in the U.S. currency grow
more expensive for holders of other currencies.
Brent crude for February delivery fell 76 cents to
settle at $106.39, after volatile trading in which the contract
swung by more than $2, between $106.12 and $108.20.
U.S. oil fell 67 cents to settle at $91.66, after
earlier touching an 8-month low of $91.24. By 4:41 p.m. EST
(2141 GMT), it traded up to $92.33. U.S. crude met resistance on
a technical chart after hitting the 8-month low, prompting some
buying, traders and analysts said.
"We took out the December lows and didn't really follow
through," said Phil Flynn, an analyst at the Price Futures Group
in Chicago, Illinois.
"It looks like we hit key support and people reversed their
positions a little bit, perhaps ahead of tomorrow's jobs
Worries over Libyan supply and ballooning U.S. production
helped to push Brent to its highest premium to U.S. crude since
early December, above $15 per barrel CL-LCO1=R.
The spread eased to $14.73 by day's end.
SUPPLY CONCERNS; JOBS
Brent crude oil pared gains after rising early in the
session prompted by supply concerns. Nexen reported an outage at
the North Sea Buzzard oilfield, the largest Forties crude blend
producing field. Forties is the most important of the North Sea
crudes underpinning the Brent benchmark.
Nexen said it was in the process of restarting production
and would return to normal levels over the next few days.
Investors will look to U.S. non-farm payrolls data to be
released on Friday at 8:30 EST (1330 GMT) for signs of continued
recovery in the world's largest economy, which may bolster
speculation over further cuts in the Federal Reserve's
commodity-friendly stimulus program.
(Additional reporting by Simon Falush in London and Jacob
Gronholt-Pedersen in Singapore; Editing by David Evans, Jason
Neely and Chris Reese)