* U.S. gasoline stocks fall, crude and distillates rise-EIA
* Spain credit rating downgraded by S&P, Markets fluctuate
* Saudi oil minister calls current oil price "sustainable"
(Recasts, updates prices, adds detail, changes from previous
dateline LONDON)
By Joshua Schneyer
NEW YORK, April 28 (Reuters) - Oil steadied below $83 a
barrel as declining U.S. gasoline stocks helped offset investor
concern about European economies after Standard & Poor's
downgraded Spain's credit rating.
Gasoline stocks fell unexpectedly in the United States last
week even as refineries ramped up operations, the U.S. Energy
Information Administration reported in weekly data, a sign of
recovering fuel demand in the world's largest consumer.
EIA data also showed U.S. crude stocks and distillate stocks
rose last week, as most analysts had expected. []
S&P downgraded Spain's credit rating the day after the
agency downgraded Greece and Portugal, pressuring the euro.
[]
"(The downgrade) doesn't portend to things looking rosy,"
said Gene McGillian of Tradition Energy in Stamford,
Connecticut. "As long as these worries are still playing out in
Europe, the dollar is going to get stronger and oil prices
could be under pressure."
Oil prices pared modest gains after the Spain downgrade
during mid-morning trading in New York. They later shot back up
into positive territory as U.S. equities markets rose further
on healthy corporate earnings that outweighed fears about
Europe. []
U.S. crude for June delivery <CLc1> rose 24 cents a barrel
to $82.68 by 1:14 p.m. EDT (1814 GMT). London Brent for June
delivery <LCOc1> was down 20 cents at $85.58 a barrel.
Brent retained an unusually high premium to NYMEX crude, of
$2.91 a barrel, after reaching a $3.65 a barrel premium to
NYMEX barrels in earlier trade, the largest since August of
2009. <CL-LCO1=R>
The discount for front-month U.S. crude contracts relative
to contracts a month later narrowed from its widest settlement
level since December on Tuesday, at $2.56 a barrel, to $2.38 a
barrel in Wednesday's trading. <CL-1=R>
The discount, known as contango, has been driven in part by
a rapid rise in oil stocks in Cushing, Oklahoma, where NYMEX
futures are delivered. EIA data showed that Cushing stocks rose
for a sixth straight time last week, but only modestly, by
500,000 barrels. []
SPAIN DOWNGRADE WEIGHS
S&P's downgrade of Spain came a day after the ratings
agency cut Greece's credit rating to junk status, the first
time a country using the euro currency has fallen below
investment grade.
Portugal's credit rating also was cut Tuesday.
News that a larger joint eurozone and International Monetary
Fund aid package for Greece was imminent helped prevent a wider
exodus by investors from risky assets such as energy
contracts.
A eurozone/IMF aid package for Greece will be worth 100-120
billion euros over three years, according to IMF Managing
Director Dominique Strauss-Kahn, opposition members of
Germany's parliament said after meeting him. []
The euro still weakened and the dollar firmed sharply
following the credit downgrades, as investors weighed Europe's
chances for economic fallout. <.DXY>
Oil and other dollar-denominated commodities tend to move in
the opposite direction to the greenback, as a weaker dollar
makes them cheaper for other currency holders and vice versa.
Ali al-Naimi, Saudi Arabia's oil minister, told a business
conference in Chicago that current oil prices are at
"sustainable levels." But he also warned that politically
motivated policies in energy consumer nations to move away from
reliance on oil and other fossil fuels may put world energy
security at risk, hurting oilfield investments.
Saudi Arabia has plans to spend $107 billion in its energy
sector over the next half decade, Naimi said.
(Additional reporting by David Sheppard in London, Gene
Ramos in New York, Karl Plume in Chicago and Alejandro
Barbajosa in Singapore; Editing by David Gregorio)
