UPDATE 8-Oil eases as demand worries offset weaker dollar, big storage draw

* Big U.S. oil stock draw, weaker dollar support oil early
in day
* Delays with coronavirus vaccines in EU fuels demand
concerns
* China limits Lunar New Year trips as COVID-19 cases rise

(Adds closing prices)
By Scott DiSavino
NEW YORK, Jan 28 (Reuters) - Oil eased on Thursday as the
market focused more on concerns that delays to vaccine rollouts
and fresh travel curbs could depress demand than the impact of a
weaker dollar and a big U.S. crude inventory drawdown.
Brent LCOc1 futures for March delivery fell 28 cents, or
0.5%, to settle at $55.53 a barrel, while U.S. West Texas
Intermediate (WTI) crude CLc1 ended 51 cents, or 1.0%, lower
at $52.34.
With the Brent March contract expiring on Friday, the
premium of the Brent front-month over the second month
LCOc1-LCOc2 rose to its highest level since February 2020 for
a fourth day in a row.
"We ... view the strong curve as indicative of tightening
balances in which upcoming Saudi production cuts are more than
offsetting increased demand concerns related to the
coronavirus," said Jim Ritterbusch, president of Ritterbusch and
Associates in Galena, Illinois.
Ritterbusch was referring to Saudi Arabia's pledge to
voluntarily cut output by 1 million barrels per day (bpd) in
February and March as part of OPEC+ deal. OPEC+ includes the
Organization of the Petroleum Exporting Countries (OPEC) plus
others like Russia. The U.S. 3-2-1 crack spread CL321-1=R , a measure of the
profit margin for refining crude into gasoline and distillate,
closed at its highest since May 2020, while the gasoline crack
spread RBc1-CLc1 ended at its highest close since June 2020.
Traders noted the crack spreads were rising with U.S.
gasoline RBc1 trading at their highest since February 2020.
Oil prices were supported earlier by Wednesday's data that
showed a huge 10 million-barrel drawdown in U.S. crude
inventories last week, which analysts said was because of a
pickup in U.S. crude exports and a drop in imports. EIA/S
"The draw was a big relief for inventories, especially as it
followed a week of builds, putting traders at ease that supply
doesn't overwhelm demand for the time being," Rystad Energy's
Louise Dickson said.
In addition, the U.S. dollar index =USD .DXY flipped
into negative territory after earlier gains, which also helped
support oil prices. Buyers using other currencies pay less for
dollar-priced oil when the greenback falls. USD/
Demand concerns, however, weighed on sentiment and prevented
oil prices from holding those earlier gains.
The U.S. economy contracted at its deepest pace since World
War Two in 2020 as the COVID-19 pandemic depressed consumer
spending and business investment, pushing millions of Americans
out of work and into poverty. A separate report showed 847,000 more people likely filed
U.S. jobless claims last week, strengthening views of persistent
labor market weakness. Stricter vaccine checks by the European Union and delivery
hold-ups from AstraZeneca Plc AZN.L and Pfizer Inc PFE.N
have slowed the rollout of shots. In China, the world's second-largest oil consumer, a surge
in coronavirus cases has led to travel restrictions ahead of the
Lunar New Year, normally the busiest travel season of the year.