* Large stockpiles continue to weigh on U.S. crude
* Brent/U.S. crude differential widens to $11.89
* U.S. weekly jobless claims rise more than expected
(Updates prices, adds quotes, jobless data)
By Claire Milhench
LONDON, Jan 27 (Reuters) - Brent crude oil reached its
biggest premium over U.S. oil for two years on Thursday as high
inventories weighed on U.S. crude, while Brent remained
supported by tight supplies and investors' momentum bets.
Brent briefly leapt more than $1 on the day following a
larger than expected jump in the U.S. weekly jobless claims
[] but by 1404 GMT it had slipped back and was up
just 67 cents on the day to $98.58.
The premium of Brent to U.S. crude was at $11.68, after
earlier touching $11.89, its highest since January 2009 .
"Brent is racing away towards $100 a barrel like there is no
tomorrow, and the Brent premium to WTI (U.S. crude futures)
continues to widen to an unprecedented level," said Olivier
Jakob, an analyst at Petromatrix.
U.S. benchmark crude oil for March delivery <CLc1> was down
29 cents to $87.04.
James Zhang, an energy analyst at Standard Bank Commodities,
said in a note that he expected the tug of war between U.S.
crude and Brent to continue.
"The latest U.S. DOE inventory report confirmed that U.S.
inventories have started their seasonal build-up, which should
continue until June, which is likely to weigh on the market," he
said.
According to the weekly report on Wednesday from the Energy
Information Administration, stocks at the Cushing, Oklahoma
terminal rose by 862,000 barrels week-on-week due to a fall in
refinery utilisation and rising imports. []
Cushing is the delivery point for the New York Mercantile
Exchange's benchmark West Texas Intermediate (WTI) crude
futures.
Overall U.S. crude inventories rose more than expected in
the week to Jan. 21, up 4.84 million barrels, compared with a
forecast for 1.2 million in a Reuters analyst poll.
[]
"In the week before we saw a big increase too. It seems that
high prices are now impacting demand," said Christophe Barret,
global oil analyst at Credit Agricole Corporate & Investment
Bank.
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For a graphic on the U.S. crude/Brent spread, click on:
http://graphics.thomsonreuters.com/gfx1/CJO_20112701105849.jpg
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Investors and analysts also attributed the wide spread to a
combination of tight supply in Brent and betting that the rising
trend in oil prices seen since late last year will continue.
"It's partly fundamentals-driven and partly market-driven,
as the momentum chasers have been following Brent, but U.S.
crude inventories are also more extended," said Gavyn Davies,
chairman of Fulcrum Asset Management, a UK-based hedge fund
manager.
JP Morgan analysts pointed to an ongoing decline in North
Sea crude supplies, while Thorbjorn Bak Jensen, an oil market
analyst at Global Risk Management, said that strong demand from
European refineries was also underpinning Brent.
As long as Cushing maintains its high crude inventories and
the European refining utilisation rate is high, the spread will
stay wide, he said: "But I'm surprised that it's continuing to
rise."
The dollar <.DXY> weakened slightly against a basket of
currencies, down 0.30 percent on the day. A weaker dollar means
that commodities priced in the U.S. currency become more
affordable for buyers using other currencies.
The U.S. weekly jobless claims came in slightly higher than
expected, up 51,000 to 454,000 in the week to Jan. 22, ahead of
the consensus forecast [].
"It does show that the recovery is growing in fits and
starts," said Peter Tuz, president of Chase Investment Counsel
in the U.S. "The market was looking for an improving trend, but
we didn't get it."
The jump was attributed to bad weather in some parts of the
country which kept workers at home and led to a backlog in
processing claims.
Analysts said an unexpected 2.5 percent fall in December for
new orders for U.S. manufactured goods was also discouraging
[].
(Additional reporting by Florence Tan in Singapore; editing by
Keiron Henderson)
