* U.S. distillate stocks fell 2.6 mln barrels - API
* EIA data to offer more clues on U.S. oil demand recovery
* Fed statement to shed light on future tightening moves
(Updates prices)
By David Sheppard
LONDON, Dec 16 (Reuters) - Oil rose above $71 a barrel on
Wednesday, extending its gains after snapping a nine-day losing
streak a day earlier, as industry data showing a sharp drop in
U.S. distillate stockpiles overshadowed signs of weak demand.
Crude for January delivery <CLc1> rose 46 cents to $71.15 a
barrel by 1423 GMT, after settling up $1.18 at $70.69 on
Tuesday. London Brent crude <LCOc1> was up 82 cents at $72.87.
The American Petroleum Institute (API) reported on Tuesday
that distillate stocks, which include diesel and heating oil,
fell by 2.6 million barrels in the world's top energy consumer
last week, eclipsing analyst forecasts of a 600,000 barrel drop.
Gains were capped, however, by signs overall demand remained
depressed. Commercial crude oil stocks rose by 924,000 barrels
last week, the industry group said, while refinery utilisation
has dropped below 80 percent of capacity.
"The market interpreted the API figures as bullish due to
the strong distillate draw that was reinforced by plummeting
temperatures in the U.S. Northeast, the country's key heating
oil market," said analysts at JBC Energy.
"However, it is questionable how bullish it really is when
refinery utilisation collapses by nearly 3 percent to a record
low of 78.6 percent, while global floating storage alone would
be (theoretically) sufficient to meet the entire U.S. heating
oil demand this winter."
The U.S. Energy Information Administration (EIA), the
statistical arm of the Department of Energy, releases its weekly
report on U.S. fuel stocks at 1530 GMT on Wednesday, which could
offer more clues on the pace of demand recovery. []
Analysts polled by Reuters said crude stocks could have
declined by 1.8 million barrels last week, while gasoline stocks
are expected to have risen by 1.3 million barrels.
(Click the link for a graphic showing the relationship
between U.S. crude stocks and the oil price
http://graphics.thomsonreuters.com/129/OIL_CSTKPL1209.gif)
The figures reported by the EIA and API often diverge, but
the government figures tend to influence prices more.
OPEC MEETING
The Organization of the Petroleum Exporting Countries
(OPEC), which pumps around one in three barrels of crude
consumed around the world, meets in Angola to discuss production
policy on Dec. 22.
The producer group on Tuesday said it sees the oil market
staying weak until the second half of next year, as a recovery
in oil demand is countered by a huge volume of excess supply
which has risen during the economic crisis. []
But few expect the group to alter production policy given
prices have risen strongly since collapsing towards $32 a barrel
at the peak of the financial crisis.
"We think that the rebound in oil prices is sustainable, as
the factors that underpinned gains in the past few weeks will
remain in place -- that the global economic recovery is
underway," said David Moore, a commodity strategist with the
Commonwealth Bank of Australia.
"Markets will increasingly focus on the global recovery
story, and with OPEC likely to keep output targets unchanged at
its meeting next week, this will support oil prices further."
(Additional reporting by Jennifer Tan in Singapore, editing
by William Hardy)
