* U.S. crude stocks at Cushing off 2.5 mln barrels - API
* Distillate stocks fall 1.5 million barrels - API
* Yellen says Fed on track to keep trimming stimulus
* Coming up: EIA oil inventory data on Wed at 10:30 a.m. EST (Adds API data, price movement in U.S. oil)
By Elizabeth Dilts
NEW YORK, Feb 11 Brent oil rose slightly on Tuesday supported by demand for U.S. heating oil and gasoline, which gained on expectations that persistent cold weather in the United States will lead to another large draw in distillates.
Frigid weather supported heating oil prices and U.S. RBOB futures saw some strength from traders unwinding the spread trade between the heating fuel and gasoline, one trader said.
Oil markets had a muted reaction to U.S. Federal Reserve Chair Janet Yellen's remarks that she will not make any abrupt changes in the U.S. central bank's monetary policy, and that the Fed will continue to reduce its stimulus.
U.S. crude oil reversed losses in post-settlement trade after data from the American Petroleum Institute showed a 2.5 million barrel draw from stocks at the contract's pricing point in Cushing, Oklahoma.
A rise in U.S. crude oil narrowed its discount to Brent oil closer to $8. CL-LCO1=R
Distillates, including heating oil and diesel, fell by 1.5 million barrels, while U.S. crude stockpiles rose by 2.1 million barrels, the API data showed.
Analysts had expected distillate stocks to fall 2.3 million barrels last week, according to a Reuters poll. U.S. crude oil inventories were expected to rise 2.7 million barrels.
"We are seeing good demand on the product side, particularly in heating fuels, and refined products have been particularly reactive to (API) reports lately," said John Kilduff, analyst at Partner Again Capital LLC.
The U.S. Energy Information Administration (EIA) will release its weekly inventory report at 10:30 a.m. EST on Wednesday.
Brent crude settled five cents higher at $108.68, after settling 94 cents lower in the previous session.
U.S. crude ended the day 12 cents lower at $99.94, but rose as much as 55 cents to $100.49 after the API data were released.
U.S. ultra-low sulfur diesel (ULSD) settled three cents higher at $3.0281 per gallon. Gasoline settled up 2.78 cents to $2.7526 per gallon.
U.S. crude oil prices were pressured by expectations that crude oil demand will slow as U.S. refiners enter maintenance season.
The EIA expects U.S. oil production to drop slightly this year and next as severe winter weather cut into well completion, even as the agency expects a boost in shale oil output.
In the meantime, Brent's gains were capped by expectations of a further increase in Libyan output. The North African nation's current production is around 600,000 barrels per day (bpd), up from its average rate in January.
North Sea Forties crude was offered lower but buyers remained on the sidelines as traders expected differentials to weaken as European refineries enter maintenance season. (Reporting by Jacob Gronholt-Pedersen and Alex Lawler; Editing by William Hardy, Chris Reese, Marguerita Choy and Diane Craft)
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