U.S. crude sinks below $100, Brent gap widens

Reuters

* U.S. crude stockpiles grew more than expected in week toOct. 11 -EIA

* EIA data shows first draw at Cushing in more than threemonths

By Jeanine Prezioso

NEW YORK, Oct 21 (Reuters) - U.S. crude oil prices on Mondaytumbled below $100 a barrel for the first time since July, whilethe discount versus European Brent hit its widest in six monthsas diminished Midwest inventories began to grow.

Seasonal refinery maintenance and shifting pipeline flowsaround the key Cushing, Oklahoma, oil hub have helped reverse amonths-long decline in stockpiles, dramatically shifting the oilmarket's structure over the past two weeks.

Now, instead of a squeeze on supplies, traders are bettingon a near-term surplus of inventories, at least untilramped-down refineries begin to rev up operations again. DelayedU.S. government data for the week to Oct. 11 confirmed the firstdecline in Cushing stocks in 14 weeks, while industry datasuggested the drawdown had continued since then.

"That crude build stood out," said Gene McGillian, analystwith Tradition Energy in Stamford, Connecticut. "After lastweek's API data there are signs that we have strong productionlevels and ample supplies."

The December premium for Brent crude to U.S. futures, theBrent/WTI spread, ballooned out by $1.30 to more than $10 abarrel to the widest since April. The December WTI contract alsofell to a discount versus January, a structure known ascontango, signalling a near-term excess of oil.

U.S. oil futures for November delivery, which expireat the end of trade on Tuesday, fell $1.59 per barrel to settleat $99.22 a barrel. Brent crude futures for December delivery fell just 30 cents to close at $109.64 a barrel.

U.S. oil for December delivery fell $1.43 to settleat $99.68 a barrel. The Dec/Jan spread dropped 25cents to end at -13 cents, flipping the second-month spread intocontango for the first time since June.

Data from the U.S. Energy Information Administration for theweek to Oct. 11, which was delayed until Monday by thegovernment shutdown, showed a 4 million barrel build in domesticstockpiles for the week. It also showed Cushing stocks rose by366,000 barrels after 14 weeks of decline.

Traders said Genscape on early Monday reported inventoriesat Cushing declined slightly between Tuesday and Friday lastweek, by 135,000 barrels.

Many analysts were already anticipating the end of therestocking phase, which they believed would be short-lived asrefineries and pipelines return from maintenance.

"Over the course of the next few weeks you expect to seeCushing draw again," said Amrita Sen, a chief analyst atconsultant Energy Aspects.

Losses in both oil contracts were limited by belief that theU.S. Federal Reserve might delay curbing its monetary stimulusprogram until next year, which is largely seen as supporting oildemand.

Brent oil found support from lower global supply. Libyanoutput has fallen sharply and Nigerian output has beenrepeatedly hit by theft.

Investors face a deluge of data this week as U.S. governmentagencies catch up after a 16-day shutdown. The U.S. LaborDepartment will release its closely watched nonfarm payrollsdata for September at 8:30 a.m. EDT (1230 GMT) on Tuesday.

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