* U.S. crude stocks fell by 3.7 mln barrels last week-EIA
* U.S. distillate stocks fell 2.9 mln barrels last week-EIA
(Updates prices, adds comments, EIA details)
By David Sheppard
LONDON, Dec 16 (Reuters) - Oil jumped by more than 3 percent
to above $73 a barrel on Wednesday after government data showing
crude stocks in the United States fell far more than expected
last week overshadowed concerns about demand.
The U.S. Energy Information Administration, the statistical
arm of the Department of Energy, said crude inventories declined
by 3.7 million barrels last week, eclipsing analysts
expectations for just a 1.8 million barrel fall. []
U.S. distillate stocks, which include heating oil and
diesel, also posted a large fall, declining 2.9 million barrels
against expectations for a 600,000 barrel dip. Gasoline stocks
bucked the trend to rise by 900,000 barrels, the EIA said, but
analysts had been predicting a larger build.
"This report was bullish across the board, with the big draw
in crude oil and distillates," said Mike Zarembski, senior
commodities analyst for OptionsExpress in Chicago.
"It seems to be the same story though, with refinery rates
still falling, and no incentive for refiners to produce gasoline
and distillates. We have seen a big drop in imports reflecting
that. It shows that demand is lacklustre."
Crude for January delivery <CLc1> rose $2.32 to $73.01 a
barrel by 1609 GMT, after settling up $1.18 at $70.69 on
Tuesday. London Brent crude <LCOc1> was up $1.75 at $73.80.
Oil prices have rebounded strongly in the past two sessions,
reversing part of a nine-day decline that had seen prices fall
from above $78 a barrel to below the key psychological $70 a
barrel level due to concerns about demand and rising U.S. crude
inventories.
(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)
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 said on Tuesday 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.
"Today's (EIA) data showed fundamental strength, which would
certainly back higher prices," said Chris Jarvis, senior analyst
at Caprock Risk Management in New Hampshire.
"We also believe the data will likely keep OPEC on the
sidelines as prices are back very close to the $75 price level
that they view as a sweet spot."
(Additional reporting by Edward McAllister and Eileen Moustakis
in New York and Jennifer Tan in Singapore; Editing by Sue
Thomas)
