Oil tops $93 on Norway strike, drop in U.S. crude stocks

Wed Jun 27, 2012 3:20pm EDT
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By Gene Ramos

NEW YORK (Reuters) - Crude oil futures rose on Wednesday as tighter North Sea supplies and strong U.S. economic data put on the back burner concerns that a European summit would do little to solve the region's debt crisis.

Prices briefly extended gains after U.S. government data showed crude and distillate stocks fell last week. <EIA/S> But the price rise was limited as investors squared books and took profits ahead of the end of the second quarter.

An oil workers' strike in Norway, the world's eighth largest oil exporter, kept Brent crude supported, pushing the price to near $94 a barrel. The strike has cut output by 240,000 barrels of day of oil, more than previously estimated but the government does not plan to intervene to halt the strike for now.

The U.S. Energy Information Administration said crude oil stockpiles fell 133,000 barrels last week, less than expected, and distillates unexpectedly dropped by 2.28 million barrels.

Crude inventories at the Cushing, Oklahoma, the delivery hub for U.S-traded oil futures, fell by 339,000 barrels while stocks at the Gulf Coast region rose to the highest level since May 2009.

The surge in Gulf Coast stocks in the wake of a drop in Cushing storage indicates that "the flow of oil to the refineries in the Houston area is building up with the reversal of the Seaway pipeline," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Demand for long-lasting U.S. manufactured goods rebounded in May by more than expected and a gauge of business spending plans increased, improving the energy demand outlook.

In London, August Brent crude settled 48 cents higher at $93.50 a barrel, having hit a session high of $93.95 after release of the EIA data.   Continued...

Fuel pumps are seen at a Cepsa Petroleum petrol station in Cuevas del Becerro, near Malaga, southern Spain March 4, 2011. REUTERS/Jon Nazca