Oil steady as British sailors leave Iran

SINGAPORE, Apr 5 (Reuters) U.S. crude oil prices steadied on Thursday as 15 British sailors left Iran, defusing political tension around the issue, while a sharp drop in weekly gasoline stocks in the United States supported the market.

U.S. light crude for May delivery was down 3 cents at .35 a barrel by 0557 GMT after dropping 26 cents on Wednesday. The prompt-month U.S. contract was at a record discount to its London counterpart on a jump in U.S. crude inventories.

London Brent crude was up 10 cents at .50 a barrel after climbing 59 cents a day ago, still hovering near the .58 seven-month high it touched on Monday, when dealers feared a prolonged dispute over the Britons.

On Thursday, the 15 British military personnel who had been held by Iran left Tehran on a flight to London, ending a two-week drama that had rattled financial markets already alarmed by the ongoing saga over Iran's nuclear programme.

''(This) reduces the tension in the market of the possibility of a military intervention,'' said Gerard Burg, an analyst from National Australia Bank.

''But the gasoline situation tightened considerably and that limited the downside. Stocks are extremely tight.'' Gasoline stockpiles in the world's largest energy consumer fell by 5 million barrels in the week to March 30, data from the U.S. Energy Information Administration showed, well above analyst forecasts for a 300,000-barrel draw.

The agency said the data included a draw of 2 million to 3 million barrels for the week ending March 23, which had not been reflected in the previous week's data, but still alarmed traders as the peak summer driving season rapidly approaches.

The drop brought gasoline stocks to the lower half of the historical range for that week, while gasoline demand stood 1.7 percent higher than a year ago over the past four weeks.

Compounding summer supply concerns, only around 850,000 tonnes of European gasoline has so far been booked for April shipment to the United States, well below March liftings of 1.5-1.7 million tonnes due to refinery maintenance.

The gasoline draw was partly offset by a much bigger than expected 4.3 million-barrel increase in crude oil inventories, more than half of which was due to a stockbuild in Cushing, Oklahoma, the delivery point for the NYMEX crude contract.

The steady rise in Cushing stocks -- up 5 million barrels or nearly a quarter in the past four weeks -- has weighed heavily on the front end of the oil curve, forcing U.S. May crude futures to trade at a record discount of more than a barrel versus Brent. This in turn drives up the cost for U.S.

imports of African crude.

REUTERS PV DS1413