* Saudi says sees demand higher, but speculation worrying
* Brent premium to U.S. crude continues to strengthen
* U.S. crude pressured by rising stockpiles
* Coming up: API oil data, 4:30 p.m. EST Tuesday
(Recasts, updates prices and market activity, changes byline
and moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Jan 24 (Reuters) - ICE Brent crude prices edged
lower in choppy trading on Monday, and U.S. crude retreated as
pressure from high inventories offset hope that rebounding
economies would lift demand this year
In early trade, Brent rose above $98 on renewed confidence
that developed economies are recovering and as Saudi Arabia's
oil minister predicted rising demand for crude in 2011.
Brent's premium to U.S. benchmark West Texas Intermediate
crude <CL-LCO1=R> topped $9 a barrel intraday on Monday, the
highest since it hit $10.37 on Feb. 12, 2009.
In London, ICE Brent crude for March <LCOc1> fell 11 cents
to $97.49 a barrel at 12:12 p.m. EST (1712 GMT), trading from
$97.04 to $98.17.
U.S. crude oil for March delivery <CLc1> fell $1.23 to
$87.88 a barrel, trading from $87.40 to $89.63.
Last week, the Energy Information Administration reported
that U.S. crude oil inventories rose 2.62 million barrels last
week, against expectations stockpiles would be lower. []
Cold weather in the U.S. Northeast and forecasts for more
in Europe helped support U.S. heating oil futures <HOc1>. The
heating oil profit margin, or crack spread <CL-HO1=R>, jumped
above $23 a barrel.
High inventories, especially at Cushing, Oklahoma, the
delivery point for the U.S. crude contract, have helped keep
U.S. crude prices in check, while North Sea production problems
have bolstered Brent. []
"There are bearish factors on the WTI side and bullish
factors on the Brent side," said Mike Wittner, analyst at
Societe Generale. "Put the two together and you have the basis
for a wide spread."
Brent got a boost when Saudi Oil Minister Ali al-Naimi,
said he expected global oil demand to rise between 1.5 million
and 1.8 million barrels per day this year -- more than forecast
by the International Energy Agency. [] []
But the Saudi minister also said he expected prices to
stabilize and voiced concern about speculators pushing prices
higher. Some analysts said this may have increased investor
caution, with Brent prices having scaled $99 a barrel as
recently as Jan. 14.
The seesawing euro and dollar added to oil volatility. The
euro climbed to a two-month high against the dollar as
investors pushed the currency through key technical and trading
levels on expectations of higher euro zone interest rates.
"There is some concern that around the globe the stimulus
from central banks is going away with the improving economic
recovery and the threat of inflation," said Phil Flynn, analyst
at PFGBest Research in Chicago, citing that as a factor helping
weigh on U.S. crude prices.
The U.S. Federal Reserve starts a two-day policy meeting on
Tuesday and investors will be eyeing the Fed's announcement on
Wednesday to dissect any changes in interest rates or stimulus
policies.
(Additional reporting by Gene Ramos in New York, Alex Lawler in
London and Florence Tan in Singapore; Editing by David
Gregorio)
