* EIA says U.S. crude stockpiles up 4.84 mln bbls
* Brent premium to US crude exceeds $10, highest in 2 yrs
* Fed says recovery continuing, keeps bond-buy plan
* Coming up: U.S. weekly jobless claims, Thursday
(Recasts, updates with settlement prices, market activity)
By Gene Ramos
NEW YORK, Jan 26 (Reuters) - U.S. crude rallied above $87 a
barrel on Wednesday, as President Barack Obama's call for lower
corporate taxes spurred hopes for higher profits and greater
energy demand.
U.S. Federal Reserve policymakers, at the end of a two-day
meeting, said they would press on with a plan to buy $600
billion in government debt to further stimulate the economy,
giving oil markets a further boost just before the close.
Investors shrugged off data showing U.S. crude oil
stockpiles jumped nearly 5 million barrels last week, more than
expected and extending supply gains for a second week. []
"Prices are holding and part of that may be due to the fact
that President Obama, in his State of the Union message, had
struck a generally pro-business stance," said Phil Flynn,
analyst at PFGBest Research in Chicago.
In his address to Congress on Tuesday night, Obama had
asked lawmakers to work with him to cut the corporate tax rate
and simplify the tax code, moves that could lead to higher
corporate profits.
U.S. equities gained on positive reaction to Obama's
pro-business proposal, even though the Fed policymakers gave a
lukewarm economic assessment, with unemployment remaining a
tough issue. But that, they said, should justify continuing
with the bond-buying plan.[]
U.S. crude for March delivery <CLH1> settled $1.32 higher,
or 1.32 percent, at $87.33 a barrel, rebounding after six
straights days of losses on rising inventories as well as
worries about global economic recovery.
In London, March Brent <LCOH1> traded up $2.61, or 2.74
percent to $97.86 a barrel.
Brent crude's premium <CL-LCO1=R> against U.S. benchmark
crude, also known as West Texas Intermediate, soared to a
24-month high of more than $10, the widest since January 2009.
Brent strengthened as data from the U.S. Energy Information
Administration showed crude stockpiles at the key storage hub
in Cushing, Oklahoma, delivery point for crude traded on the
New York Mercantile Exchange, rose 862,000 barrels last week.
"Brent and WTI have been trading increasingly as entirely
separate commodities in recent weeks, driven by decidedly
different fundamentals," said J.P. Morgan analysts in a
report.
"Unsurprisingly, the main issue for the wide Brent-WTI
spread seems to lie not with Brent but rather with WTI."
COMMODIIES SEEN OFFSETING TUESDAY'S LOSS
The rally in oil markets was part of an overall surge in
commodities as demand optimism resurfaced, putting the
Reuters-Jefferies CRB index <.CRB>, which tracks 19
commodities, on a course to erasing Tuesday's hefty loss.
[]
Weekly U.S. government data showed a mixed picture for
refined fuels, with gasoline stocks rising more than expected,
by 2.4 million barrels, and distillates supplies down by
140,000 barrels, far less than forecast.
Overall, the data reflected a bigger increase in crude
stocks than the 2.1 million barrel build that industry group
American Petroleum Institute reported late Tuesday. []
But a big disparity developed in distillates, as the API
reported a whopping 5.0 million barrel slide in that category.
Brent and U.S. crude hit more than two-year highs earlier
this month, Brent trading just 80 cents short of the $100 a
barrel milestone on Jan. 14.
The immediate risk of a breach of $100 had now receded with
prices likely to trend lower through the first quarter, said
analysts at Credit Agricole CIB and Facts Global Energy.
"I think the fall is justified by the disappearance of very
cold weather in Europe and the restart of the Alaskan pipeline
as well as signs that the Organization of the Petroleum
Exporting Countries is increasing production," said analyst
Christophe Barret at Credit Agricole.
(Additional reporting by Robert Gibbbons in New York; Alex
Lawler and Emma Farge in London; Florence Tan in Singapore;
editing by Marguerita Choy)
