Oil up as smaller U.S. crude build offsets end of Kuwait strike

By Barani Krishnan

NEW YORK (Reuters) - Oil prices rebounded on Wednesday after a smaller-than-expected U.S. crude build offset glut worries stirred by the end of a Kuwaiti oil workers strike.

The U.S. government's Energy Information Administration said crude stockpiles rose 2.1 million barrels last week.

Analysts polled by Reuters had expected a 2.4 million-barrel build for the period, while industry group American Petroleum Institute had called for a 3.1 million-barrel rise. [API/S]

"It's overall mixed and slightly supportive, with total stocks of refined products and crude oil combined declining slightly," Dominick Chirichella, senior partner at the Energy Management Institute in New York said, commenting on the EIA data.

Brent's front-month contract was up 45 cents at $44.48 a barrel by 11:40 a.m. EDT (1540 GMT). It had fallen to a session low of $42.81 earlier.

U.S. crude's front-month contract, May, due to expire on Wednesday, was up 28 cents at $41.36 a barrel. The session low was $39.85.

Prices of ultra-low sulfur diesel, also known as heating oil, rose 3 percent and hit 4-1/2-month highs after an unexpected drop in stockpiles of distillates, which include diesel. Gasoline held steady after inventories fell just about a tenth of the expected levels.

"Distillates are the standout bullish element of the report and gasoline is the disappointment," said Matt Smith, director of commodity research at New York-headquartered energy data provider ClipperData.

Crude prices initially tumbled as the Kuwaiti oil and gas industry called off a three-day strike and reports later said six supertankers had lined up at Kuwait's crude export terminal to load oil. Kuwait has also raised its oil output to 1.6 million barrels per day (bpd) from 1.1 million on Sunday.

(Additional reporting by Simon Falush in LONDON; Editing by Marguerita Choy)