* Mubarak hands over powers to VP, does not step down
* Brent-WTI spread narrows by $2 after record $16.09
* U.S. jobless claims fall to 2-1/2-year low
* Coming up: U.S. Dec global trade data on Friday
(Recasts, updates prices)
By Gene Ramos
NEW YORK, Feb 10 (Reuters) - Brent crude pared losses in
late Thursday trading after Egypt's President Hosni Mubarak
said he would transfer powers to his vice president, but would
not step down.
The news set off more worries that Egypt's unrest may spark
similar turmoil in other Middle Eastern and north African
countries and possibly disrupt oil shipments from the region.
The late retracements followed a volatile trading day in
which investors struggled to digest the flow of geopolitical
and fundamental issues.
In London, Brent crude for March delivery <LCOH1> retraced
and traded down 30 cents at $101.52 a barrel by 4:45 p.m. EST
(2145 GMT), having settled earlier at $100.87, down 95 cents.
U.S. crude for March delivery <CLH1> added to gains and was
up 78 cents at $87.49, after settlement at $86.73, edging up 2
cents. The gains in U.S. crude helped narrow its discount to
Brent by about $2, after it hit a record of $16.09 a barrel.
The lower U.S. crude prices have also supported margins for
refiners, with the U.S. heating oil crack spread <CL-HO1=R>
jumping to $29.93 a barrel, the widest since June 2008. The
gasoline crack spread <RB-CL1=R> rose to $20.15, the widest
since July 2007.
Mubarak provoked rage on Egypt's streets on Thursday when
he said he would hand powers to his deputy but disappointed
protesters who had been expecting him to step down altogether
after two weeks of unrest. []
"His speech did not do anything to assuage those who are in
opposition to him (and) analysts expect the protests to
continue," said Peter Beutel, president of trading consultants
Cameron Hanover in New Canaan, Connecticut.
"The great fear of the oil market is that violence and
protests which seem likely to intensify after the speech may be
transferred to other parts of the oil-rich Middle East," Beutel
said.
Earlier, U.S. crude oil futures found support early from
data showing U.S. jobless benefit claims fell to a 2-1/2-year
low, a sign economic recovery was gathering momentum, before
paring gains on the Mubarak news. []
The market also weighed reports from the International
Energy Agency and the Organization of the Petroleum Exporting
Countries that the producer group last month raised oil output
to the highest level since December 2008. However, both groups
raised their demand forecasts. []
U.S. gasoline and heating oil futures slumped more than 2
percent, falling back after sharp gains on Wednesday.
Earlier, oil prices rose on reports that the Saudi king may
have died, but then Saudi officials said the king was in
"excellent shape". []
(Additional reporting by Robert Gibbons in New York; Jessica
Donati in London; Seng Li Peng in Singapore; Editing by Dale
Hudson)
