UPDATE 11-Brent crude hits record high in euros

Thu Feb 23, 2012 10:34pm GMT

 * Brent premium over U.S. crude narrows
 * UN inspectors declare Iran mission a failure
 * U.S. weekly crude stocks rise sharply-EIA
 * Coming up: U.S. consumer confidence data, Friday

 (Updates with U.S. crude post-settlement high, volumes)	
 By Gene Ramos	
 NEW YORK, Feb 23 (Reuters) - Brent crude rose for a
fourth day, hitting a fresh nine-month high and a record in euro
terms on Thursday, creating renewed concerns for cash-strapped
Europe on heightened tensions between Iran and the West.	
 On a euro basis, Brent futures hit a record 93.60 euros per
barrel in early trade, exceeding the previous peak of 93.46
euros hit on July 3, 2008, prompting concern that high oil
prices would hit the shaky economic recovery and further dent
demand. 
 U.S. crude rose further, as investors sold off a key spread
-- the premium of international benchmark Brent to U.S. futures
-- after a government report showed a drop in inventories at the
Cushing, Oklahoma, delivery point for the New York Mercantile
Exchange's contract.	
 Rising inventories in the U.S. Midwest have depressed the
value for U.S. futures, widening Brent's premium to U.S. crude
to over $20 a barrel earlier in the month. The spread
CL-LCO1=R narrowed 83 cents on Thursday, closing at $15.79.   	
 Goldman Sachs said in a research note it expected the spread
to narrow to $5 a barrel over the next six months, as the
reversal of the Seaway pipeline in the Midwest sends more crude
from the region to the Gulf Coast refining hub. 	
 The bank also recommended taking profits on July 2012 Brent
long positions and opening September 2012 long positions for
U.S. crude oil futures.
 "Spread trading on WTI-Brent pushed up U.S. crude, which is
also testing technical resistance here," said Chris Dillman,
analyst at Tradition Energy in Stamford, Connecticut. 	
 In London, Brent crude for April delivery settled at
$123.62 a barrel, rising 72 cents, to mark the highest
front-month settlement since May 2 last year, off its intraday
high of $124.50.
 Rising for the sixth consecutive session, U.S. April crude
 settled at $107.83, gaining $1.55,  the highest
settlement for front-month NYMEX crude since May 4 last year.
 In post-settlement trading, U.S. April crude extended its
session high to $108.74, the highest intraday price for
front-month NYMEX crude since May last year.  
 Brent's total trading volume was 606,181 contracts, 17
percent above its 30-day average and U.S. crude volume was
715,999 contracts, nearly 4 percent above its 30-day average,
Reuters data showed. 	
 Stockpiles at the Cushing, Oklahoma, hub dropped 315,000
even though overall U.S. crude inventories rose 1.63 million
barrels last week, more than expected, according to data from
the U.S. Energy Information Administration.	
 "The draw in Cushing caused a selling of the Brent-WTI
spread, which had strengthened previously after stocks there
rose in recent weeks," said Hamza Khan, analyst at the Schork
Group in Villanova, Pennsylvania.	
  	
 IRAN TENSIONS
 Iran remained defiant after U.N. nuclear inspectors said
they had failed in their latest mission to check activities at a
site where the U.N. International Energy Agency said there is a
facility to test explosives. 
 Iran's stance has sparked fears that Iran's confrontation
with the West over its disputed nuclear program would escalate
and affect oil flow from the Middle East.	
  "It's all about Iran. The inspectors leaving intensifies
the concerns and backs up the Israeli argument that diplomacy
will not work," said John Kilduff, partner at Again Capital LLC
in New York.
   Sanctions imposed by the United States against Tehran have
already caused Asian buyers to cut purchases of Iranian oil
while the European Union has moved to ban Iranian oil from July.
 The bombardment of rebel sites by government forces in Syria
and attacks on mostly Shi'ite targets across Iraq added to
investor anxiety over the Middle East.
  
 
 U.S. INVENTORIES, DEMAND ECONOMIC DATA
 While U.S. inventories of distillates and gasoline showed
modest declines last week, demand for refined oil products
plunged to their lowest level in nearly 15 years, EIA data
showed in the latest EIA report.	
 Total U.S. oil product demand on a four-week average basis
fell last week by 6.7 percent year-on-year to 18.05 million
barrels per day, the lowest level since April 1997. 
 Ahead of the U.S. summer driving season, motorists were
cutting back on fuel usage due to high pump prices.	
 	
	
 (Additional reporting by Robert Gibbons and Matthew Robinson in
New York, Zaida Espana and Simon Falush in London; Editing by
Lisa Shumaker)	
 
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