* Refinery outages, Yemen tensions and storm watch fuel
gains
* Second-largest 2-day rally in U.S. crude in 25 years
* U.S. crude up 7 pct, extending Monday's 10 pct gain
* Brent up 5 pct, back above $50 a barrel
(New throughout, updates prices and market activity to
settlement)
By Barani Krishnan
NEW YORK, Aug 28 (Reuters) - U.S. crude rose 6 percent on
Friday, notching its first weekly gain in two months, after a
rally in gasoline from refinery outages and concerns about
strife in Yemen fed a second frenzied day of short-covering in
oil.
Market players also kept an eye on a storm that appeared to
be approaching the oil-rich U.S. Gulf of Mexico.
U.S. crude gained nearly 17 percent over two sessions,
ending eight straight weeks of losses. It was also the second
largest two-day rise for the market in 25 years, Reuters data
showed.
"A severely oversold and shorted oil market is creating a
bid for covering in U.S. crude," said Chris Jarvis, analyst at
Caprock Risk Management in Frederick, Maryland.
U.S. crude's front-month contract CLc1 settled up $2.66,
or 6.3 percent, at $45.22 a barrel. At its session high, it was
up more than $3, or 7 percent at nearly $46. For the week, it
rose 12 percent.
Brent, the global benchmark LCOc1 , closed up $2.49, or 5
percent, at $50.05 a barrel, after hitting a session peak at
$50.98. It gained 10 percent on the week.
Gasoline RBc1 prices rose about 5 percent after Phillips
66 PSX.N unexpectedly shut down a 150,000-barrel-per-day fluid
catalytic cracker at its 238,000 bpd refinery in Linden, New
Jersey, due to a leak. ID:nL1N1130U3
A chemical leak reported on Friday at PBF Energy Inc's
182,200-barrel-per-day refinery in Delaware City, Delaware,
brought renewed focus to that plant also. ID:nL1N10Y0NT
Adding to the refinery watch, industry monitor Genscape said
Shell's RDSa.L 404,000 bpd crude distillation unit in Pernis,
Rotterdam, was offline, a day after experiencing a brief
shutdown. Europe's largest refinery had been flaring during the
day, typically a sign of production issues or planned
maintenance work. ID:nL5N1134LE
Warplanes from a Saudi-led coalition killed 10 people in air
raids over Yemen, local officials said. ID:nL5N1133YE
Some analysts said U.S. crude also got a boost from concerns
that Tropical Storm Erika was headed toward oil and gas
installations in the U.S. Gulf.
A global glut of fuel and sluggish demand have cut oil
prices in half from a year ago. Worries over China's economy
have weighed on in recent weeks. Some analysts said the
two-month slump of nearly 30 percent meant a rebound was due.
The rally on Thursday was fed by a stock market rise, strong
U.S. growth data and a pipeline outage in Nigeria.
Some traders remained convinced the rally would fizzle and
oil prices would head lower again.
Spreads between spot and one-year forward U.S. crude
CLc1-CLc12 were little changed on Friday, suggesting little
improvement in fundamentals of oil.
"This confirms that the spread market doesn't buy this
rally," Tariq Zahir, an oil bear at Tyche Caspital Advisors in
Laurel Hollow, New York, said.
The oil market shrugged off the weekly reading for the U.S.
oil rig count which showed an addition of one rig this week.
RIG/U