Oil up on partial draw in U.S. crude stocks, Saudi tensions

NEW YORK (Reuters) - Oil prices rose on Monday after data showing a partial draw in stockpiles at the delivery point for U.S. crude helped steady a market weighed earlier by near record highs in Saudi production.

Tensions in the Middle East and a drop last week in the number of rigs drilling for oil in the United States also put a floor beneath U.K. North Sea Brent and U.S. crude futures, traders said.

Brent , the more widely-referenced benchmark, was up 10 cents at $63.55 a barrel by 11:53 a.m. EDT, after falling more than $1 earlier.

U.S. crude rose 65 cents to $56.39, after losing nearly $1 at the session low.

"The market was bouncing around looking for news to latch on to, and the draw numbers for U.S. crude certainly helped," said Phil Flynn, analyst at the Price Futures Group in Chicago.

Oil services firm Genscape reported a draw of more 900,000 barrels at the Cushing, Oklahoma delivery point for U.S. crude between Tuesday and Friday last week, market sources who saw the data said. For the week to Friday, Genscape reported a build of about 350,000 barrels, they said.

Speculation has been rife that the rapidly climbing U.S. crude supplies would soon cause storage tanks in Cushing to top, leaving little or no room for more barrels. The draw reported by Genscape eased at least some of that anxiety, traders said.

Saudi Arabia put its security forces on alert for a possible militant attack on a shopping mall or energy installation.

Oil prices have risen around 17 percent since April began, on speculation about falling U.S. output as the domestic rig count fell.

But Wall Street bank and major energy trader Morgan Stanley said the drop could be outweighed by increases in Saudi production.

"We worry about the market's fixation on the U.S.," Morgan Stanley said in a note. "Saudi Arabia alone added the equivalent of half of Bakken (the largest U.S. shale oilfield) production in a matter of months ? far beyond any U.S. slowdown."

Saudi oil minister Ali al-Naimi told Reuters in Seoul on Monday that the No. 1 crude exporter expected to produce at near record highs of around 10 million barrels per day in April.

"I have said many times we will always be happy to supply to our customers with what they want," Naimi said. "Now they want 10 million."

(Additional reporting by Himanshu Ojha in London and Henning Gloystein and Jacob Gronholt-Pedersen in Singapore; Editing by William Hardy, Alison Williams, Grant McCool)