US Crude Up 4% On Lower Stockpile Bets; Brent Spread Narrows
NEW YORK, Sept 21 (Reuters) - Oil prices rallied on Monday, with U.S crude surging more than 4 percent on signs of declining stockpiles, less drilling that could reduce future output and a jump in gasoline futures that boosted the overall petroleum complex.
Global oil benchmark Brent gained 3 percent. Its premium over U.S. crude <CL-LCO1=R> narrowed to below the key psychological mark of $2 a barrel as U.S. crude's fundamentals improved relative to Brent.
Market intelligence firm Genscape estimated a draw of nearly 810,000 barrels in the week ending Sept. 15 from storage tanks at Cushing, Oklahoma, the main delivery point for U.S. crude futures, traders who have seen the data said.
Cushing stocks fell nearly 2 million barrels in the week to Sept. 11, the biggest draw since February 2014, U.S. government data showed.
A Reuters poll on Monday forecast that U.S. crude inventories as a whole fell by 2.1 million barrels last week.
Crude traders also focused on the soon-to-expire front-month contract in the West Texas Intermediate (WTI), which serves as the U.S. benchmark. WTI's October contract will go off the NYMEX board after Tuesday's settlement, and November will move up as the front-month.
Gasoline futures, meanwhile, rose more than 3 percent after a fire reported on Saturday at an unit of Husky Energy's 155,000 barrel-per-day (bpd) refinery in Lima, Ohio.
The premium for refining gasoline from crude, known as the gasoline crack <CLc1-RBc1>, reached its highest in nearly two weeks, rising a combined 14 percent over two sessions.
"We're seeing some crackspread action as we move towards WTI expiration and it's all contributing to the bump higher," said Donald Morton, energy trader for Herbert J. Sims & Co, an investment banking house based in Fairfield, Connecticut.
U.S. crude's front-month settled up $2, or 4.5 percent, at $46.68 a barrel.
The front-month in Brent finished up $1.45, or 3.1 percent, at $48.92.
U.S. drillers have cut the number of oil rigs in operation for three straight weeks.
Oil-rig reductions suggest a decline of more than 250,000 bpd in U.S. crude production between the second and fourth quarters of this year, Goldman Sachs said in a report.
Energy consultancy Wood Mackenzie estimated that $1.5 trillion of "uncommitted spending on new conventional projects and North American unconventional oil" was uneconomic at even $50 a barrel.
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Bernadette Baum and Marguerita Choy)
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