Crude climbs on Middle East tension, stock data

SEOUL Feb 17 (Reuters) - U.S. crude futures extended gains in early Asian trades on Thursday, helped by a less-than-expected rise in U.S. crude inventory and fresh tension between Israel and Iran that fuelled concern about Middle East unrest.

The Energy Information Administration's weekly stock report showed crude oil stockpiles rose only 860,000 barrels last week, against a forecast for stocks to be up 2.2 million barrels.

In the oil-producing region of the Middle East, two Iranian warships planned to sail through the Suez canal en route to Syria, Israel said, calling it a "provocation" by the Islamic Republic.

Oil markets were already jittery after reports of clashes in Iran, Yemen and Bahrain and a rare show of unrest in Libya added to fears that the kind of unrest that toppled the presidents of Egypt and Tunisia could spread to Middle East oil producers and disrupt oil flow in the region.

FUNDAMENTALS

* NYMEX crude for March delivery was up 23 cents or 0.27 percent at $85.22 a barrel by 0021 GMT, after settling up 67 cents, or 0.79 percent, at $84.99 a day earlier.

* U.S. crude's discount against Brent crude was at $16.21 CL-LCO1=R after marking a record $16.31 on Wednesday, as ICE Brent crude futures hovered to the highest since September 2008, above $104 a barrel.

* Brent April crude was up $2.14, or 2.11 percent, at $104.29 a barrel against its near 2-1/2 year high close at $103.78.

MARKET NEWS

* U.S. distillate stockpiles fell 3.1 million barrels, much more than the 800,000-barrel drop that had been expected. Gasoline stockpiles rose 205,000 barrels, far less than the rise of 1.7 million barrels expected.

* Hezbollah chief Sayyed Hassan Nasrallah warned Israel that the militant group would avenge the death of slain commander Imad Moughniyeh, who was killed in a bombing in Damascus three years ago.

* U.S. core wholesale prices rose in January at their fastest rate in more than two years.

* U.S. industrial production slipped 0.1 percent in January, the first decline since June 2009, after rising 1.2 percent in December.

* Housing starts jumped 14.6 percent in January, but permits for future building fell 10.4 percent, the Commerce Department said.

* The U.S. dollar sank on Wednesday on the news of the Israel-Iran tension, with the euro rising 0.5 percent against the dollar to $1.3562 , its second consecutive daily gain, while the dollar's nearly two-week rally against the yen came to a halt.

* The S&P 500 rose on Wednesday to twice its value from just two years ago, a bounce whose vigor has not been seen since the Great Depression, to close above 1,333.58, double the intraday low hit in early March 2009.

The Dow Jones industrial average gained 0.50 percent to 12,288.17. The Standard & Poor's 500 Index rose 0.63 percent to 1,336.32. The Nasdaq Composite Index added 0.76 percent to 2,825.56.

(Source: http://af.reuters.com/article/commoditiesNews/idAFTOE71F06Y20110217?sp=true)