* U.S. crude stocks fell by 3.7 mln barrels last week-EIA
* US distillate stocks fell 2.9 mln barrels last week-EIA
* OPEC seen unlikely to lift output targets at meeting
* Fed unlikely to signal U.S. rate rise, dollar weakens
(Adds details. Changes byline and dateline from previous
LONDON)
By Joshua Schneyer
NEW YORK, Dec 16 (Reuters) - Oil jumped by 3 percent to $73
a barrel on Wednesday after data showed crude stocks in the
United States fell more than expected last week, easing
concerns about flagging demand.
Crude inventories declined by 3.7 million barrels in the
week to Dec. 11, according to the U.S. Energy Information
Administration, eclipsing analyst forecasts for a more modest
draw of 1.8 million barrels. []
A 2.9 million-barrel draw in U.S. distillate stocks, which
include heating oil and diesel, was almost five times bigger
than the 600,000-barrel dip analysts expected, while gasoline
stocks grew less than analysts had expected.
"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.
Crude for January delivery <CLc1> rose for a second day, up
$2.31 to $73 a barrel at 12:50 p.m. EST (1750 GMT). London
Brent crude <LCOc1> was up $1.53 to $73.58 a barrel.
Oil prices rose for a second day after a nine-session rout
in which they plummeted 11.3 percent from levels above $78 a
barrel on Dec. 1. Analysts attributed the fall to persistently
low fuel demand and rising U.S. crude inventories.
<-------------------------------------------------------
Relationship between U.S. crude stocks and the oil price
http://link.reuters.com/dyd37g
-------------------------------------------------------->
The drop in U.S. distillate stocks last week may signal
that surplus stocks are beginning to be depleted, after rising
far above historical averages as fuel demand was battered by a
U.S. recession.
"The best news here, in terms of market stabilization, is
the big draw in distillates," said Brad Samples, analyst at
Summit Energy in Louisville, Kentucky.
OPEC MEETING
The Organization of the Petroleum Exporting Countries
(OPEC), whose daily production meets around a third of global
crude demand, will convene in Angola to discuss output policy
on Dec. 22.
But few expect OPEC to scale back the 4.2 million barrels a
day in production cuts the group has agreed upon since last
year. Most members are comfortable with the current range of
oil prices.
Oil has risen sharply since collapsing toward $32 a barrel
at the peak of the financial crisis last December, but it's
still a far cry from record prices above $147 a barrel reached
last July.
"Prices are back very close to the $75 price level that
they (OPEC members) view as a sweet spot," said Chris Jarvis,
senior analyst at Caprock Risk Management in New Hampshire.
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
amassed during the economic crisis. []
FED DECISION
Oil prices also rose as the U.S. dollar <.DXY> weakened and
U.S. equities rose <.SPX> ahead of Wednesday's interest rate
decision by the U.S. Federal Reserve Open Market Committee, at
which the Fed is expected to keep rates unchanged at near zero.
New U.S. home construction rose less than expected last
month and consumer prices increased only marginally
[], suggesting little need for the Fed to raise
rates any time soon to slow the pace of economic recovery.
A Fed statement is due at 2:15 p.m. EST (1915 GMT).
(Additional reporting by David Sheppard in London, Edward
McAllister, Eileen Moustakis and Robert Gibbons in New York,
and Jennifer Tan in Singapore; Editing by Lisa Shumaker)
