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UPDATE 10-Oil up 3 pct on euro zone moves, refinery concerns

Published 09/27/2011, 04:53 PM
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* Brent trading volumes higher than U.S. futures

* Biggest daily percentage rise in US crude since May

* RBOB gasoline up nearly 5 percent on refinery concerns

* US crude stocks rise slightly, gasoline jumps -API

* Coming up: US EIA inventory data at 1430 GMT Wednesday

(Updates with API data, trading volumes, details on Brent, WTI curve)

By Matthew Robinson

NEW YORK, Sept 27 (Reuters) - Oil jumped more than 3 percent on Tuesday, snapping a four-day losing streak on efforts to strengthen the euro zone rescue fund and concerns about U.S. fuel supplies.

European officials were seen considering plans to boost the size of the region's bailout fund and to recapitalize banks, sparking hopes of an easing in the debt crisis that has dragged stock markets and commodities this month.

Equities rose and commodities gained, with gold also shaking off four days of declines. End-of-quarter and technical buying also provided lift.

"What we might be seeing is some end-of-the-quarter bookmarking," Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

"Right now, the (U.S. crude futures) market may have triggered some technical buying at the $80 level, I think this is a technically oriented rally with some end-of-the-quarter buying supporting it."

A strong, counter-seasonal jump in RBOB gasoline futures further fueled the rally, rising nearly 5 percent on supply concerns after news ConocoPhillips would sell or idle its Trainer, Pennsylvania plant and that Motiva Enterprise shut a cat cracker at its Louisiana refinery. [ID:nS1E78Q0X1]

Brent futures rose $3.20 to settle at $107.14 a barrel, after touching a session high at $107.54. It marked the biggest percentage gain for Brent since Aug. 10.

U.S. crude showed even bigger gains, rising $4.21 to settle at $84.45 a barrel in the biggest daily percentage gain since May 9.

Brent volumes, which have traditionally been lower those for U.S. futures, again outpaced those of the U.S. contract.

The rising activity in Brent, compared with the New York Mercantile Exchange's U.S. contract, could be tied to traders anticipating large, long-only index commodity funds will increase their 2012 holdings in Brent relative to U.S. futures, analysts said.

The U.S. contract has come under pressure this year as rising volumes of crude from Canada flood into the U.S. Midcontinent, especially the Cushing, Oklahoma delivery point for the NYMEX contract. In addition, the backwardated shape of the Brent curve can yield better returns for long-only indexes than the WTI curve, which is in contango.

"The NYMEX is just such a false indicator of where demand is and where the real price of oil is, the Brent market is well over $100 and the NYMEX is just completely detached," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania.

"I would expect to see an increase in Brent and a decrease in NYMEX (by long-only index funds)."

In afternoon activity in New York, more than 600,000 Brent contracts had changed hands, 17 percent over the 30-day average. About 500,000 contracts traded on the New York Mercantile Exchange's U.S. contract, about 24 percent below its 30-day average.

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For a 24-hour technical outlook on Brent:

http://graphics.thomsonreuters.com/WT1/20112709083049.jpg

For a 24-hour technical outlook on oil:

http://graphics.thomsonreuters.com/WT1/20112709081600.jpg

FACTBOX-Hurdles to changing euro rescue fund

[ID:nLDE77O0OF]

Latest on Libya and Mideast crisis: [ID:nTOPMEAST]

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EYES ON LIBYA, US INVENTORIES

The premium paid for Brent over U.S. crude narrowed to below $23 a barrel as traders focused on the return of crude supply from Libya. The country's port authority chief told Reuters the OPEC nation had shipped its first crude cargo from the eastern port of Marsa el Hariga on Sept. 25, bound for Italy. [ID:nL5E7KR29X]

The loss of Libyan crude, a key feedstock for Italian refiners, helped widen Brent's premium to U.S. crude to record levels over $27 a barrel this month.

Data from the American Petroleum Institute showed a 568,000 barrel gain in U.S. crude stockpiles for the week to Sept. 23, slightly lower than analyst forecasts, and a steep 4.6 million barrel rise in gasoline inventories. [ID:nEAP104R00]

Stockpiles at the Cushing hub fell by 1 million barrels, while distillate inventories slipped. The market will be next be looking for data from the U.S. Energy Information Administration, due out Wednesday morning. [EIA/S]

(Reporting by Matthew Robinson, Gene Ramos, Robert Gibbons in New York City, Jessica Donati in London; Francis Kan in Singapore; Editing by Marguerita Choy)

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