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UPDATE 8-Oil up 3 pct on U.S. crude draw; Brent back above $50

Published 30/06/2016, 04:30 am
© Reuters.  UPDATE 8-Oil up 3 pct on U.S. crude draw; Brent back above $50
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* Brent, WTI up over 3 pct, extend Monday's 3 pct rise

* EIA reports 4.1 mln bbls US crude drawdown

* Analysts expected crude decline of 2.4 mln bbls

* Fading Brexit fear, Norway strike, Venezuela crisis help

* Big gasoline build also surprises market on bearish side (New throughout; updates prices and adds widening discount for longer-dated oil)

By Barani Krishnan

NEW YORK, June 29 (Reuters) - Oil prices jumped more than 3 percent on Wednesday, with Brent crude rising above the psychological $50 a barrel mark, after a larger-than-expected drawdown in U.S. crude inventories.

Fading concerns over Britain's exit from the European Union, potential for an oil workers' strike in Norway and a crisis in Venezuela's energy sector added support to crude futures. spot contracts in key benchmarks Brent and U.S. crude rallied, the premium for longer-dated oil spiked too as traders bet crude in storage will fetch better prices in coming months.

The U.S. Energy Information Administration reported that crude stockpiles fell 4.1 million barrels in the week to June 24, the sixth consecutive week of drawdowns. EIA/S

That was more than the 2.4 million barrels expected by analysts in a Reuters poll. API/S

Brent crude futures LCOc1 were up $1.62, or 3.3 percent, at $50.20 per barrel by 2:10 p.m. EDT (1810 GMT).

U.S. crude's West Texas Intermediate (WTI) futures CLc1 rose $1.60, or 3.4 percent, to $49.45.

It was a second straight day of gains for Brent and WTI, which have risen about 6 percent or more each since Monday's settlement, paring much of the 8 percent lost in the previous two sessions after the Brexit vote.

Among longer-dated oil futures, the discount for December WTI versus December 2017 held near the almost three month high above $2.40 a barrel seen on Tuesday.

"We played on that curve to widen out and it was good for us," said Tariq Zahir, crude spreads trader for Tyche Capital Advisors in New York.

The discount in nearby oil versus forward, known as contango, has widened as traders took advantage of cheap freight to store oil on tankers on expectations of further price gains by 2017 as a crude glut abates. oil futures HOc1 , also known as ultralow sulfur diesel, rose 3.8 percent, leading the oil complex, after a 1.8 million barrels decline in stockpiles of distillates, which include ULSD. Analysts had expected a 14,000-barrel build instead.

Despite that, some traders were bearish on their longer-term view of oil as the EIA also reported an unseasonably large rise of 1.4 million barrels in gasoline USOILG=ECI versus analysts' expectations for a 58,000-barrel draw.

On the East Coast, gasoline stockpiles rose to record levels.

"I am still unimpressed with overall crude draws for June," said Scott Shelton, energy futures broker with ICAP (LON:IAP) in Durham, North Carolina. "With 16.7 million barrels per day of crude runs and production declines, we should have larger drawdowns for Q2. That has simply not happened."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC on Brent crude oil contango

http://tmsnrt.rs/2918al1 TAKE A LOOK-World oil gluts persists despite disruptions

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