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UPDATE 8- U.S. crude jumps more than $1 as domestic stocks drop

Anna Louie Sussman
Wednesday, 4 Dec 2013 | 12:51 PM ET

* EIA data shows 5.6 million barrel fall in US crude stocks

* OPEC keeps 30 mln bpd output cap for first half of 2014

* Keystone XL pipeline may relieve Cushing supply bottleneck

(Updates prices, changes byline, dateline (pvs LONDON)

NEW YORK, Dec 4 (Reuters) - U.S. crude oil futures rose more than $1 on Wednesday as government data showed an unexpected draw in U.S. stockpiles in the world's largest oil consumer.

U.S. crude oil rose after the U.S. government's Energy Information Administration (EIA) showed domestic crude stocks fell by 5.6 million barrels in the week ended Nov. 29, snapping 10 straight weeks of builds. A Reuters poll had forecast a build of 300,000 barrels.

"We know it's the end of the year and 1/8oil companies 3/8 like to draw down supply, but that's more than what even the most bullish analysts were looking for," said Phil Flynn, an energy analyst at the Price Future Group in Chicago, Illinois.

Brent crude oil futures edged lower after the 12-member Organization of the Petroleum Exporting Countries agreed on Wednesday to renew for the first half of 2014 a collective oil production cap of 30 million barrels a day.

Brent crude for January delivery fell by 10 cents to $112.52 a barrel by 12:13 p.m. EST (1713 GMT), recovering from a low of $111.46. U.S. crude rose $1.28 to $97.32, having earlier touched a five-week high of $97.53.

Brent's premium over U.S. crude <CL-LCO1=R>, or West Texas Intermediate (WTI), narrowed to $15.21 a barrel. It earlier touched a low of $14.57, shaving more than $4 from the $19.41 gap set on Nov. 27, to notch the largest four-day decline in the spread since Oct. 2012

"You still have further liquidation of the Brent-WTI spread," said Andy Lebow, vice president at Jefferies Bache in New York.

The EIA data echoed figures from the American Petroleum Institute (API) on Tuesday that showed a drop of 12.4 million barrels in domestic inventories. The EIA's 5.6 million barrel draw cut around one-sixth of the 36 million barrels that had built up over the previous 10 weeks.

Much of that oil went to crude-hungry refiners, which registered a 3 percent uptick in utilization rates over the week to reach 92.4 percent.

"The refiners are acting like we're going into the Fourth of July," said Flynn, a time when demand for refined products is usually strong. "Do they know what holiday it is?"

This followed TransCanada Corp's announcement on Monday that it would begin operating its Keystone XL pipeline on Jan. 3, allowing stockpiles of crude oil inventories at the Cushing oil hub to move to the U.S. Gulf Coast, where a large share of the country's refining capacity is concentrated.

The OPEC agreement came despite two of its members, Iraq and Iran, having set high output targets for the year ahead.

(Additional reporting by Joshua Franklin in London, Jacob Gronholt-Pedersen in Singapore; Editing by Jason Neely, David Goodman and Bob Burgdorfer)