June 27, 2012 / 3:28 AM / in 5 years

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

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

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.

On Tuesday, front-month Brent posted its largest daily percentage gain since March 1 to settle above $93 in the wake of more oil platforms set to be shut in the North Sea.

U.S. August crude settled up 85 cents at $80.21 a barrel, the highest in a week, after climbing to a session high of $80.92.

"U.S. crude drew support from the stronger-than-expected durable goods orders and firmer S&P 500 that called attention away from worries about the apparent lack of agreement among European leaders ahead of the June 28-29 summit," said Tim Evans, energy analyst at Citi Futures Perspective in New York.

The drop in Cushing stockpiles narrowed Brent's premium against U.S. crude to $13.29 from $13.66 on Tuesday.

Trading volume perked up late for Brent, rising 21.3 percent against its 30-day average. U.S. volume was off its 30-day average by 23 percent on caution ahead of economic reports in the next two days that include a final reading of the U.S. first quarter GDP, weekly jobless claims and consumer confidence in June.

Brent crude futures' curve flattened on the strike, now on its fourth day, with more output shut in.

However, there have not been cargo loading delays of Oseberg crude, which has been affected by the strike. Traders said some cargoes were getting loaded from storage tanks.

EU SUMMIT AWAITED, MIDDLE EAST EYED

On the eve of the EU summit, German Chancellor Angela Merkel ignored calls from Spain and Italy for emergency action to lower their soaring borrowing costs.

The euro zone debt crisis has festered amid slowing global economic growth, with downbeat data in recent weeks from the United States and China, the world's top two consumers of oil.

"The EU summit should prove pivotal as to how the oil complex finishes this week and quarter," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

Meanwhile, Turkey appeared to be backing away from immediate military confrontation with Syria, somewhat easing tensions that traders said had supported Brent prices.

Additional reporting by Robert Gibbons in New York, Ikuko Kurahone Simon Falush and Alex Lawler in London, Florence Tan in Singapore; Editing by Bob Burgdorfer and Marguerita Choy

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