* U.S. home sales, stable monetary policy boost sentiment
* Technicals show U.S. crude to fall to $86.03/bbl
* Coming Up: U.S. weekly jobless claims 1330 GMT
(Updates prices)
By Florence Tan
SINGAPORE, Jan 27 (Reuters) - Brent crude hovered near $98
on Thursday after better-than-expected U.S. home sales data and
a pledge by the Federal Reserve to keep monetary policy steady
drummed up market sentiment.
President Barack Obama's call for lower corporate taxes also
spurred hopes for higher profits and stronger energy demand.
"Any good economic data out coming out of America is good
for oil," said Ben LeBrun, a Sydney-based markets analyst at CMC
Markets.
ICE Brent crude for March rose 12 cents to $98.03 a
barrel at 0713 GMT, after a 2.79 percent gain in the previous
day.
U.S. crude oil for March delivery rose 5 cents to
$87.38 a barrel. The March contract rebounded 1.32 percent on
Wednesday after six straight days of losses.
The greenback slipped on Thursday to 11-week lows
against a basket of currencies the Fed's decision to keep a $600
billion bond-buying plan backed the view that a wave of
liquidity seeking higher returns would continue to flow through
into riskier assets.
"Oil prices are very much on a knife edge," LeBrun said.
U.S. economic data is improving, but prices could fall on news
of any supply hike from OPEC and on further measures from China
to tame inflation, he said.
Brent and U.S. crude hit more than two-year highs earlier
this month, Brent trading just 80 cents shy of the $100 a barrel
milestone on Jan. 14. U.S. crude a high of $92.58 on the first
trading day of the year.
Reuters markets analyst Wang Tao said on Jan. 20 that
technical charts showed Brent was unlikely to touch $100 a
barrel within four weeks.
BRENT-WTI PREMIUM UP
Brent crude's premium <CL-LCO1=R> against U.S. benchmark
crude, also known as West Texas Intermediate, leaped to just
below $10.70 on Wednesday.
The spread represents crude economics in the U.S. Midwest
and international markets and, over time, drives investments
that will normalise price discrepancies, JPMorgan analysts led
by Lawrence Eagles said in a Jan. 26 note.
U.S. crude inventories rose more than expected last week as
imports increased and refinery utilisation dropped, government
data showed Wednesday. Inventories at Cushing, Oklahoma, the
delivery point for WTI, rose 862,000 barrels.
Valero Energy Corp's executive in charge of crude supply to
the U.S. leading independent refiner said WTI has "almost become
irrelevant" because of its deep discount.
JPMorgan said pipeline flows would need to be reconfigured
to ease the high stocks, but the forward Brent-WTI spread
indicated that the market does not see a solution by 2012.
"Prompt WTI spreads have to remain wide for some time to
come, and supercontangos will remain a recurring feature on the
landscape," the bank said.
"Longer-term incentives however suggest that the Brent-WTI
spread in 2012 needs to widen."
Reuters technical analyst Wang Tao said on Jan. 25 Brent's
premium to WTI is on a firm uptrend and is expected to reach
$11.29 per barrel in two weeks, after a minor drop to $8.00.
For a graphic on the Brent-WTI technical analysis, click:
http://graphics.thomsonreuters.com/WT/20112501102706.jpg
(Editing by Ed Lane)
