* Large stockpiles continue to weigh on U.S. crude
* Brent/U.S. crude differential widens to $11.27
* Coming Up: U.S. weekly jobless claims 1330 GMT
(Retops, adds quotes)
By Claire Milhench
LONDON, Jan 27 (Reuters) - Brent crude oil pushed towards
its biggest premium over U.S. crude in two years on Thursday as
high inventories weighed on U.S. crude, while Brent remained
supported by tight supplies and investors' momentum bets.
By 1016 GMT, the premium of Brent to U.S. crude was at
$11.19, close to its highest since January 2009 after earlier
touching $11.27.
U.S. benchmark crude oil for March delivery <CLc1> was down
96 cents to $86.37. ICE Brent for March <LCOc1> was down just 35
cents to $97.56 after rising 2.8 percent on Wednesday.
"The front month of U.S. crude is very weak due to high
inventories at Cushing," said Christophe Barret, global oil
analyst at Credit Agricole Corporate & Investment Bank.
According to the Energy Information Administration, stocks
at the Cushing, Oklahoma terminal rose by 862,000 barrels
week-on-week due to a fall in refinery utilisation and rising
imports.
Cushing is the delivery point for the New York Mercantile
Exchange's benchmark West Texas Intermediate (WTI) crude
futures.
Overall U.S. crude inventories rose more than expected in
the week to Jan. 21, up 4.84 million barrels compared with a
forecast for 1.2 million in a Reuters analyst poll.
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"The statistics published yesterday were globally relatively
bearish. They showed strong increases in crude oil stocks on the
U.S. Gulf Coast, and in the week before we saw a big increase
too. It seems that high prices are now impacting demand," said
Barret.
Investors also attributed the wide spread to a combination
of high U.S. inventories and momentum chasing by traders.
"It's partly fundamentals-driven and partly market-driven,
as the momentum chasers have been following Brent, but U.S.
crude inventories are also more extended," said Gavyn Davies,
chairman of Fulcrum Asset Management, a UK-based hedge fund
manager.
JP Morgan analysts said in a note that Brent tightness
reflected the ongoing decline in North Sea crude supplies and
"the increased pull of Middle Eastern, Russian and West African
crudes by Asia".
SUPERCONTAGOS
They added that pipeline flows would have to be reconfigured
to ease high U.S. inventories, but the forward Brent-WTI spread
indicated that the market does not see a solution by 2012.
"Prompt WTI spreads have to remain wide for some time to
come, and supercontangos will remain a recurring feature on the
landscape," they said.
An executive at Valero Energy Corp <VLO.N> said West Texas
Intermediate had "almost become irrelevant" because of its deep
discount. []
Reuters technical analyst Wang Tao said on Jan. 25 that
Brent's premium to U.S. crude is on a firm uptrend and is
expected to reach $11.29 per barrel in two weeks, after a minor
drop to $8.00.
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For a graphic on the Brent-WTI technical analysis, click:
http://graphics.thomsonreuters.com/WT/20112501102706.jpg
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Brent was also supported by positive sentiment on the back
of the U.S. Federal Reserve's commitment to maintain its
economic stimulus package.
On Wednesday Fed policymakers voted unanimously to maintain
a $600 billion bond-buying plan to fuel the economic recovery,
boosting liquidity across the commodities complex and helping
Asian equities to one-week highs [].
"In this sort of environment, you look for growth assets. As
a result, equities and commodities are high up on the list,"
said Craig James, chief economist at CommSec in Sydney.
In addition, China's top 24 refineries are expected to
process 170,000 barrels more crude oil per day this year than in
2010, or an increase of 4 percent, due to planned heavy
maintenance, a Reuters survey found [].
(Additional reporting by Florence Tan in Singapore; Editing by
Jane Baird)
