* Brent-U.S. crude both up about $1; spread narrows in US
favor
* Genscape data shows almost 810,000-barrel Cushing draw
* US crude output to fall by 255,000 bpd from Q2-Q4 2015
-Goldman
* $1.5 trln of oil projects uneconomic at $50/bbl -Woodmac
(Adds Genscape data on Cushing crude draw and narrowing
Brent-US spread, updates prices)
By Barani Krishnan
NEW YORK, Sept 21 (Reuters) - Oil prices rallied on Monday,
with U.S crude up as much as 3 percent, amid a jump in gasoline
prices and on concerns that U.S. crude production may slow as
drilling steadily declines.
Global oil benchmark Brent gained 2 percent, narrowing its
premium over U.S. crude CL-LCO1=R to around $2 a barrel after
briefly falling below that key level due to improved
fundamentals for U.S. crude.
Gasoline futures on the New York Mercantile Exchange RBc1
were up about 3 percent after a fire was reported on Saturday at
an unit of Husky Energy's HSE.TO 155,000 barrel-per-day
refinery in Lima, Ohio. ID:nWNAB08DIQ
The premium for refining gasoline from crude, known as
gasoline crack CLc1-RBc1 , reached its highest in nearly two
weeks, rising a combined 17 percent over the past two sessions.
In crude oil, market intelligence firm Genscape added to
positive sentiment by estimating a draw of nearly 810,000
barrels in the week ending Sept. 15 from storage tanks at
Cushing, Oklahoma, the main delivery point for U.S. crude
futures, according to traders who have seen the data.
Cushing stocks fell nearly 2 million barrels in the week to
Sept. 11, the biggest draw since February 2014, U.S. government
data showed. ID:nL1N11M128
Crude traders also focused on the soon-to-expire
front-month contract in the West Texas Intermediate (WTI), which
serves as the U.S. benchmark. WTI's October contract CLV5 will
go off the NYMEX board after Tuesday's settlement, and November
CLX5 will move up as the front-month.
"We're seeing some crackspread action as we move towards WTI
expiration and it's all contributing to the bump higher," said
Donald Morton, energy trader for Herbert J. Sims & Co, an
investment banking house based in Fairfield, Connecticut.
U.S. crude's front-month CLc1 was up $1.40, or 3.1
percent, at $46.08 a barrel by 12:17 p.m. EDT (1617 GMT).
The front-month in Brent LCOc1 rose 90 cents, or about 2
percent, to $48.37.
U.S. drillers have cut the number of oil rigs in operation
for three straight weeks. ID:nL1N11O1E2 ID:nL5N0Z11E4
Oil-rig reductions suggest a decline of more than 250,000
barrels per day (bpd) in U.S. crude production between the
second and fourth quarters of this year, Goldman Sachs (NYSE:GS) said in a
report.
Energy consultancy Wood Mackenzie estimated that $1.5
trillion of "uncommitted spending on new conventional projects
and North American unconventional oil" was uneconomic at even
$50 a barrel.
"While operators are seeking an average cost reduction of
20-30 percent on projects, supply chain savings through
squeezing the service sector will only achieve around 10-15
percent on average," Wood Mackenzie said in a report.
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Oil oversupply http://link.reuters.com/jaz84w
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