UPDATE 3-Oil pressured by Cyprus worries

Tue Mar 26, 2013 5:34am EDT

* Euro zone faces tough banking regime after deal -official

* Brent-WTI spread over $13, up from narrowest since July

* Coming Up: API oil inventory data; 2030 GMT (Updates throughout, changes dateline from SINGAPORE)

By Simon Falush

LONDON, March 26 (Reuters) - Brent oil fell slightly on Tuesday, remaining within its range of the past two weeks, as the effect of the Cyprus bailout faded and traders saw little direction for the market.

Brent crude futures slipped 8 cents to $108.08 a barrel by 0932 GMT, in the middle of its recent $107 to $109 range. U.S. crude gained 40 cents to $95.21.

"People are starting to turn away from their focus on Cyprus, and I think it will fade away as an issue quite quickly," said Filip Petersson, an analyst at SEB in Stockholm.

"I expect there to be a search for a new driver, and until we get one, we will continue to trade sideways."

After reaching an 11th-hour deal with the European Union, the European Central Bank and the International Monetary Fund to shut down the country's second-largest bank in return for 10 billion euros ($13 billion) in rescue funds, the president of Cyprus assured citizens the deal was in their best interests.

But banks will remain closed until Thursday and even then subject to capital controls to prevent a run on deposits.

The European Central bank, meanwhile, sought to allay anxiety that the bailout of Cyprus would have negative implications for other euro zone states.

The banking crisis in Cyprus was a unique case, and the rescue plan used should not be seen as a model for other European countries that fall into trouble, ECB Executive Board member Benoit Coeure said on Tuesday.

This followed comments from Jeroen Dijsselbloem, head of a group of euro zone finance ministers, who said the Cyprus bailout represented a new template for resolving regional banking problems and that other nations might have to restructure banking sectors to adapt.

SAUDI COMMENTS

Oil prices were also limited by comments on Monday from Saudi Arabia's oil minister, Ali al-Naimi, that a price of around $100 a barrel was reasonable for consumers and producers, highlighting the top crude exporter's preferred range.

Brent prices in mid-February pushed above $119 a barrel to their highest level this year, before pulling back on economic concerns and improving North Sea supply.

Brent's premium to U.S. crude CL-LCO1=R was trading at $13.65 a barrel by 0909 GMT on Tuesday, after narrowing to $12.85 in the previous session, the narrowest since early July.

"From a fundamental perspective, a further narrowing will be tricky to achieve in the short term as certain volumes of light-sweet crudes require a (WTI-Brent) spread of around -$15 to be viable for rail transport in the long run," JBC Energy analysts wrote in a note.

"However, as markets tend to overshoot, it is possible that the spread will attempt to test last year's highs, which were around -$11."

U.S. commercial crude oil stockpiles are forecast to have increased by 1.1 million barrels last week on an expected rise in imports, ahead of weekly industry data later in the day, a preliminary Reuters survey of analysts showed on Monday. (editing by Jane Baird)