* Two Iranian war ships plan to sail to Syria -Israel
* Israel foreign minister calls move "provocation"
* Israel sees no serious military threat but unsettled
* U.S. crude inventories rise, Cushing higher - EIA
* Coming Up: U.S. weekly jobless claims, Thursday
(Updates with prices, market activity, details)
By Gene Ramos
NEW YORK, Feb 16 (Reuters) - Brent oil prices surged to
near 2-1/2 year highs on Wednesday as fresh tensions between
Israel and Iran added to markets already on edge over spreading
unrest in the Middle East.
Israel's foreign minister said two Iranian warships planned
to sail through the Suez canal en route to Syria and called the
move a "provocation", sending up prices in morning U.S. trade.
Prices remained elevated even though the Iranian naval
contingent described by Foreign Minister Avigdor Lieberman
posed no significant military threat to Israel. However, it
could spell the closest-ever encounter by the forces of the two
old foes, who are geographically distant. []
Brent crude <LCOc1> rose $1.97 to $103.61 at 2 p.m. EST
(1900 GMT), after hitting $104.52 earlier, the highest level
since September 2008. U.S. crude <CLc1> settled up 67 cents at
$84.99, rising after three days of losses.
Oil markets were already jittery after reports of clashes
in Iran, Yemen and Bahrain and a rare show of unrest in Libya
added to fears that the kind of unrest that toppled the
presidents of Egypt and Tunisia could spread to oil-producing
countries in the Middle East and disrupt oil flow in the
region. []
"Troubles in the Middle East are back on the agenda,
protests in Bahrain and Saudi have drummed up political
tension," said Rob Montefusco, an oil trader at Sucden
Financial.
The popular uprising in Egypt had helped push Brent crude
over $100 a barrel in late January, sending its premium to U.S.
oil futures to record levels over $16 a barrel.
Brent's stronger gains pushed its premium to U.S. crude
<CL-LCO1=R> to $16.03 a barrel on Wednesday, less than 30 cents
from the record hit Friday.
U.S. CRUDE, GASOLINE STOCKS UP
Adding to the widening of the premium was the latest rise
in inventory levels at the Cushing, Oklahoma, delivery point
for the New York Mercantile Exchange oil futures contract.
Crude stored at the hub rose 250,000 barrels last week to
37.7 million barrels, just below the 38.3 million barrel record
level hit in the week to Jan. 28, the U.S. Energy Information
Administration's weekly data showed. []
In total, U.S. crude stocks rose 860,000 barrels, to 345.9
million barrels, up for the fifth straight week, and initially
weighing on U.S. crude futures, even though the increase was
much less than the forecast.
U.S. gasoline stockpiles gained for the seventh week in a
row, adding 200,000 barrels, much less than expected, to 241.1
million barrels.
Even so, the gasoline crack spread rose to near the week's
high above $21 a barrel, the highest in 3-1/2 years.
<RB-CL1=R>
(Reporting by Matthew Robinson and Robert Gibbons in New York,
Jessica Donati in London and Jennifer Tan in Singapore; Editing
by Lisa
Shumaker)
