* 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
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
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
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)