* Reports Mubarak may step down keep market wary
* Brent-WTI spread narrows by $2 after record $16.09
* U.S. jobless claims fall to a 2-1/2-year low
* Coming Up: U.S. Dec. global trade data Friday
(Recasts, updates throughout)
By Gene Ramos
NEW YORK, Feb 10 (Reuters) - Brent crude prices fell on
Thursday on news beleaguered President Hosni Mubarak of Egypt
may step down later in the day as investors struggled to digest
the day's flow of geopolitical and fundamental issues.
U.S. crude oil futures found support early from data
showing U.S. jobless benefit claims fell to a 2-1/2-year low, a
sign economic recovery was gathering momentum, before later
paring gains on the Mubarak news. []
The gains in U.S. crude helped narrow its discount to Brent
futures by about $2, after it hit a record of $16.09 a barrel.
The low U.S. crude prices have supported margins for
refiners, with the U.S. heating oil crack spread <CL-HO1=R>
jumping to $29.93 a barrel, the widest since June 2008. The
gasoline crack spread <RB-CL1=R> rose to $20.15, the widest
since July 2007.
The market also weighed reports from the International
Energy Agency and the Organization of the Petroleum Exporting
Countries that the producer group last month raised oil output
to the highest level since December 2008. However, both groups
raised their demand forecasts. []
In London, Brent crude for March delivery <LCOH1> settled
down 95 cents at $100.87 a barrel, after having hit an early
high of $102.88.
U.S. oil prices retraced most of their early gains, with
March futures <CLc1> posting a settlement price of $86.73 a
barrel, up 2 cents, after rising to a session high of $87.90
early.
U.S. gasoline and heating oil futures slumped more than 2
percent, falling back after sharp gains on Wednesday.
The Egyptian leader looked likely to step down on Thursday
in response to more than two weeks of protests against his
30-year rule, after concerns of a potential supply disruption
through the Suez Canal helped lift Brent crude above $100 a
barrel over the past two weeks. []
"Since Brent had the biggest rally due to events in Egypt,
I would expect that it could be the one to fall the hardest
from a Mubarak departure," said Tom Bentz, a broker at BNP
Paribas Commodity Futures Inc in New York.
U.S. data showed that first-time filings for jobless
benefits fell to their lowest point since early July 2008,
reinforcing the view that economic recovery was on track.
Earlier, oil prices rose on reports that the Saudi king may
have died, but then Saudi officials said the king was in
"excellent shape."
(Additional reporting by Robert Gibbons in New York; Jessica
Donati in London; Seng Li Peng in Singapore; Editing by Walter
Bagley)
