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UPDATE 11-Oil rises on flood threat to U.S. refiners, China

Published 05/10/2011, 05:17 PM
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* Chinese average daily oil imports third-highest in April

* U.S. gasoline rises on flood concerns

* Coming Up: EIA oil data at 10:30 a.m. EDT, Wednesday

(Updates with API data paragraphs 4-6 and trading volumes paragraph 8)

By Matthew Robinson and Robert Gibbons

NEW YORK, May 10 (Reuters) - Oil rose on Tuesday, supported by concerns that flooding could hit the U.S. Gulf Coast refining hub and data showing strong Chinese crude imports for April.

While no refineries had been forced to cut operations yet, rising waters along the Mississippi threatened to disrupt plants in Louisiana, including the second largest U.S. refinery, in the next two weeks.

Gasoline futures led oil market gains, with the flood threat adding to concerns about 11 straight weeks of inventory declines as the United States gears up for the peak summer holiday period. [ID:nN10229975]

U.S. gasoline inventories fell 1.8 million barrels last week, the industry group American Petroleum Institute said in a report released late on Tuesday, much more than the 200,000-barrel dip analysts polled by Reuters had expected, [API/S] [ID:nN10113370]

But crude stockpiles rose 2.9 million barrels, the API said, more than double expectations, and distillate stocks rose 582,000 barrels, in line with estimates.

The U.S. Energy Information Administration's inventory report follows on Wednesday morning.

Brent crude for June delivery rose $1.73 to settle at $117.63 a barrel. U.S. June crude settled up $1.33 at $103.88 a barrel as U.S. gasoline futures jumped 3 percent.

Crude oil trade volumes, which surged last week as prices tumbled $16 a barrel, remained strong with Brent volumes 60 percent over the 30-day moving average and U.S. crude 15 percent above that average, according to Reuters data.

Trading volume has been high as traders remain cautious and watch every market turn after last week's sell-off and the 6 percent rebound on Monday, analysts said.

"Crude futures are stronger today as the flooding in Mississippi River has raised worries about refinery operations in that region," said Mark Waggoner, president of Excel Futures in Bend, Oregon.

"The other bullish influence today is the strong trade data from China, which seems to have overcome, at least for the moment, concerns about any slowdown in its economy."

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Map of U.S. refineries near the Mississippi river:

http://r.reuters.com/gyt49r

Factbox on refineries near Mississippi River:

[ID:nN10229975]

Graphic on oil volatility vs. margin changes:

http://link.reuters.com/zav49r

SPECIAL REPORT - What really triggered oil's greatest

rout: [ID:nN08158912]

For a 24-hour technical outlook on Brent:

http://graphics.thomsonreuters.com/WT1/20111005084418.jpg

For a graphic of commodity correlations with the dollar:

http://r.reuters.com/wex39r

For a graphic of commodities performance:

http://r.reuters.com/nab49r

PDF on commodities rout: http://link.reuters.com/xer49r

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CHINA, MARGINS

Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24 million barrels of crude oil per day (bpd), up 1.7 percent on the year, official customs data showed on Tuesday. [ID:nL3E7GA0AX]

Oil product imports in the No. 2 oil consumer fell by 17 percent drop, however, as smaller refineries cut runs to cope with high oil prices, diminishing demand for feed stocks.

News that the CME Group Inc raised margins on U.S. crude oil futures for a fourth time since February in an effort to tackle rising volatility weighed on prices in early trade.

"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank. (Reporting by Robert Gibbons, Gene Ramos, and Matthew Robinson in New York; Additional reporting by Jessica Donati in London and Alejandro Barbajosa, Randy Fabi and Manolo Serapio Jr.; Editing by Marguerita Choy)

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