* U.S. gasoline stocks fall, crude and distillates rise-EIA
* Spain credit rating downgraded by S&P, Markets fluctuate
* Fed pledges to keep rates low, sees US economic growth
* Traders focus on spreads, Brent premium near 8-mth high
(Recasts, adds Fed, settlement prices)
By Joshua Schneyer
NEW YORK, April 28 (Reuters) - Oil rose on Wednesday as
falling U.S. gasoline stocks and an upbeat Federal Reserve
assessment of U.S. economic growth prospects offset investor
concern about Europe after Standard & Poor's downgraded Spain's
credit rating.
The Fed said it will keep interest rates low for an
extended period and pointed to signs of strength in the
economy, which also supported U.S. stocks. []
[]
"The U.S. economy shows signs of improvement, according to
the Fed, and that's clearly positive for the oil market," said
Gene McGillian of Tradition Energy in Stamford, Connecticut.
"With interest rates low as they are, equities and commodities
are attractive to investors without other alternatives.
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, one sign of
recovering demand from motorists in the world's largest
consumer. []
U.S. crude for June delivery <CLc1> rose 78 cents a barrel
to settle at $83.22 a barrel. London Brent for June delivery
<LCOc1> ended up 38 cents at $86.16 a barrel.
Market focus was on spread trading as front month Brent was
boosted earlier to its highest premium over the West Texas
Intermediate contract in more than eight months, of $3.65, on
fears a crude glut in the U.S. Midwest would continue to weigh
on WTI.
U.S. crude stocks and distillate stocks last week rose
nearly double what analysts had forecast, according to EIA
data.
Oil stocks in Cushing, Oklahoma, the delivery point for the
New York Mercantile Exchange futures, rose for a sixth straight
time last week. But the rise was a modest half a million
barrels, which narrowed the discount for front-month U.S. crude
contract to the next month to $2.42 a barrel.
The discount, known as contango, has been driven in part by
a rapid rise in oil stocks in Cushing and on Tuesday, hit its
widest settlement level since December at $2.56 a barrel.
The jump in distillates stocks also weighed on the U.S.
heating oil crack <CL-HO1=R>, which narrowed from an 11-month
high reached on Tuesday. The price difference between crude and
heating oil has unseasonally doubled in the past month.
[]
Standard & Poor's downgraded Spain's credit rating the day
after the agency downgraded Greece and Portugal, pressuring the
euro to a one-year low against the dollar, before it rallied on
the Fed statement.[]
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.
"(The downgrade) doesn't portend to things looking rosy,"
said McGillian. "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."
(Additional reporting by David Sheppard in London, Gene Ramos
in New York, Karl Plume in Chicago and Alejandro Barbajosa in
Singapore; Editing by Marguerita Choy)
