(Corrects percentage in fourth paragraph)
* Spanish bond auction results lift Europe stocks, Brent
* But U.S. jobless claims, manufacturing data shave gains
* Brent at premium to WTI, despite mid-week Cushing draw
* Coming up: CFTC trader positions on Friday
(Updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, June 17 (Reuters) - Brent crude oil pared gains
and prompt U.S. futures fell on Thursday after disappointing
U.S. economic data undermined earlier optimism tied to a
Spanish bond auction.
U.S. gasoline and heating oil prices strengthened, however,
aided by signs of improving underlying demand and refinery
glitches, lifting heating oil product crack spreads by more
than $2 a barrel and gasoline more than $1 to their highest in
about a month.
London ICE Brent crude for August <LCOc1> rose 54 cents to
settle at $78.68 a barrel, after earlier trading nearly $1
higher.
U.S. July crude futures <CLc1> fell 88 cents, or 1.1
percent, to settle at $76.79 a barrel.
July was pressured by the big stockpiles at the Cushing,
Oklahoma, delivery hub and Thursday's July options expiration,
while nearby contracts those further out managed to retain more
of their value.
"A strong bond auction by Spain is a strong sign that the
market is more relaxed about European financial problems, and
as European financial fears relax, Brent crude oil gains in
strength," JP Morgan analysts said in a research note.
Spain sold just under its target amount of 3.5 billion
euros ($4.29 billion) of 10-year and 30-year government bonds
on Thursday. Analysts said the sale went well after the bonds
cheapened considerably ahead of the sale.[]
It followed a report, denied by the European Union and the
International Monetary Fund, that they and the U.S. Treasury
were drawing up a safety net for Spain.
The euro rose to a three-week high against the U.S. dollar.
[]
JP Morgan noted Brent's price rise was "additionally
positive" as it came despite a strike by Norwegian oil workers
being averted after they landed a wage deal to maintain output
at three North Sea oil and gas fields. []
U.S. initial claims for state unemployment benefits
increased 12,000 to a seasonally adjusted 472,000 in the week
ended June 12, the Labor Department said on Thursday.
Factory activity growth plummeted in the U.S. Mid-Atlantic
region in June, raising concerns that an anemic U.S. economic
recovery is faltering. The Philadelphia Federal Reserve Bank
said its business activity index dropped to 8.0 in June from
May's 21.4. []
MIXED DAY
Amid the mixed performance by the oil complex, refined fuel
prices led gains on refinery glitches, lower capacity
utilization and recent signs of improved demand.
Valero Energy Corp said on Thursday a gasoline-making unit
at its McKee, Texas, refinery, a key recipient of Cushing
crude, may be down until mid-July after the unit shut Wednesday
for unplanned repairs. []
The front end of the U.S. crude curve fell, causing the
Brent/WTI spread to widen and product cracks to rally, despite
a report showing that record Cushing stockpiles that have
pressured prompt prices may finally be easing.
"Some of the weakness in the crude time spreads related to
a refinery snag at Valero's Mckee facility ..., a development
that could potentially back up crude supply into the Cushing
region," said Jim Ritterbusch, president at Ritterbusch &
Associates in Galena, Illinois.
Cushing stocks rose 200,000 barrels to 37.6 million barrels
in the week to June 11, according to the U.S. Energy
Information Administration's report on Wednesday, helping keep
front-month U.S. July crude at a deficit to August. <CL-1=R>
But industry data provider Genscape on Thursday said
Cushing stocks fell 709,048 barrels to 39.3 million barrels in
the week to June 15, dropping from a record high.
[]
(Additional reporting by Alejandro Barbajosa in Singapore and
Ikuko Kurahone in London; Editing by David Gregorio)
