U.S. crude jumps before govt stockpile report; Brent premium narrows

By Barani Krishnan

NEW YORK (Reuters) - U.S. crude rose nearly 3 percent on Tuesday, buoyed by gains on Wall Street, higher gasoline prices and a strong stockpile draw report, while Brent oil advanced less, narrowing the transatlantic spread to the lowest in eight months.

U.S. crude futures rallied almost through the day, slipping into the negative only briefly after the White House said it would not back a bill by rival Republicans to repeal a 40-year-old ban on U.S. crude exports.

A late surge in gasoline prices brought U.S. crude futures back up before the close. The market rose further in post-settlement trade after industry group the American Petroleum Institute (API) reported a 3.1 million-barrel crude drawdown last week, versus analyst expectations for a build.

Some speculators in the oil market have been leaning toward a stockpile draw since Monday, after market intelligence firm Genscape estimated that inventories at the key U.S. crude delivery point in Cushing, Oklahoma, fell by 1.8 million barrels last week.

"If indeed the draw is as big as API says, it's going to lead to more upside price pressure for U.S. crude," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

An updated Reuters poll of analysts on Tuesday forecast a build of 1.2 million barrels for U.S. crude last week. The U.S. government's Energy Information Administration will issue official weekly stockpiles data on Wednesday. [EIA/S]

U.S. crude's front-month settled up 59 cents, or 1.3 percent, at $44.59 a barrel. In post-settlement trade, it rose as much as $1.25, or 2.8 percent, to $45.25 a barrel by 4:50 p.m. EDT (2050 GMT), reacting to the API inventory report.

London-traded Brent crude, the global benchmark for oil, settled up 26 cents at $46.63 a barrel as the October contract, which served as its front-month , expired. In Monday's trade, Brent lost $1.77, or almost 4 percent.

U.S. crude's outperformance versus Brent narrowed the spread between the two benchmarks to an eight-month low, pushing it below $1.50 a barrel late on Tuesday.

The outlook for U.S. crude improved this week after positive forecasts by the EIA, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). [OPEC/M]

"The market remains oversupplied, but the pace of stock builds is moderating," London-based Energy Aspects said in a report.

(Additional reporting by Alex Lawler and Henning Gloystein; Editing by Marguerita Choy and Lisa Shumaker)