By Anna Louie Sussman
NEW YORK, Dec 18 (Reuters) - Brent crude oil futures shrugged off the U.S. Federal Reserve's decision to begin tapering its stimulus program on Wednesday, maintaining gains that widened its premium to U.S. crude.
Both Brent and U.S. crude oil pared gains immediately after the 2 p.m. EST announcement, then bounced back several minutes later.
The U.S. Federal Reserve announced plans to trim its aggressive bond-buying program on Wednesday but sought to temper the long-awaited move by suggesting its key interest rate would stay lower for even longer than previously promised.
The central bank said it would reduce its monthly asset purchases by $10 billion to total $75 billion. It trimmed equally from mortgage and Treasury bonds.
'The Fed is indicating that their data is showing a strong enough economy that they're pulling back,' said John Kilduff, a partner with Again Capital LLC in New York.
'That's bullish for crude oil and refined product.'
Strong demand for Brent from Mediterranean refiners in the absence of Libyan supply also boosted the international benchmark. Mediterranean refiners have more than doubled purchases of North Sea crude grades since November, an unusual move that is expected to extend into 2014 with British and Norwegian oil as the go-to substitute for absent Libyan barrels.
U.S. crude gained scant support from data from the U.S. Energy Information Administration (EIA) showing crude inventories in the world's largest oil consumer dropped 2.9 million barrels to 372.3 million barrels, compared with forecasts of a 2.3 million barrel draw. The higher-than-expected draw was countered by data showing refinery runs fell 1.1 percent from the previous week.
Brent crude rose $1.06 to $109.50 by 2:23 p.m. EST (1923 GMT), after settling nearly $1 lower on Tuesday.
U.S. oil rose 28 cents to $97.50, after earlier rising 79 cents to a high of $98.01 on strong housing data from the U.S.
The spread between the two benchmarks stood at $12, widening by over $1 from Tuesday's close.
U.S. RBOB gasoline futures gained 4.55 cents to $2.6927.
U.S. stocks also rose after briefly plunging on Wednesday after the Fed's announcement.
(Additional reporting by Ron Bousso in London, Manash Goswami in Singapore; editing by Jason Neely, David Evans, Andrew Hay and Meredith Mazzilli) Keywords: MARKETS OIL/
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