* U.S. crude stocks rise; gasoline, distillates fall
* OPEC chief sees pledged supply curbs delivered by end-Jan
* Equities rally, weaker dollar lend support
(Recasts with U.S. inventory report, adds OPEC comments)
By Alex Lawler
LONDON, Jan 28 (Reuters) - Oil firmed towards $42 a barrel
on Wednesday after a U.S. government report showed U.S. gasoline
inventories declined and as equities rallied on more optimistic
sentiment about the economy.
Gasoline stocks unexpectedly fell and distillates supplies
fell more than expected, the U.S. Energy Information
Administration said. [] That countered a big, 6.2 million
barrel rise in crude stocks.
"The crude number is pretty negative, but it looks like the
products are kind of stabilizing the whole complex right now,"
said Tom Bentz, analyst at BNP Paribas Commodity Futures in New
York.
"Some of the optimism in the economic side too, I think, is
supporting it as well."
U.S. crude <CLc1> was up 20 cents a barrel to $41.78 by 1600
GMT, after plunging 9 percent on Tuesday as bleak U.S. economic
data stirred demand concerns. London Brent <LCOc1> climbed 93
cents to $44.66.
Brent is trading at an atypical premium to U.S. crude as
high inventories pressure the U.S. benchmark and, according to
some analysts, healthier crude demand in Europe supports Brent.
Oil drew support from rising equities in Europe and the U.S.
and a weaker U.S. dollar. Dollar weakness can boost investor
demand for oil and other dollar-denominated commodities.
U.S. stocks rose on optimism the Obama administration was
moving quickly to stabilize the ailing banking sector and hopes
of another stimulus package to stave off further deterioration
in the economy.
Fuel demand has weakened, especially in developed economies,
because of the global economic crisis, boosting inventories and
knocking prices down from a record high of $147.27 a barrel hit
in July.
On Tuesday, an American Petroleum Institute (API) report on
Tuesday showed crude inventories rose by 800,000 barrels.
[] The EIA data is seen by traders as a more complete
snapshot of supplies.
Supply cuts by the Organization of the Petroleum Exporting
Countries (OPEC) since the second half of last year have offered
prices some support against weakening demand.
OPEC is expected to have fully delivered on its pledged
supply curbs by the end of this month, its Secretary-General
said on Wednesday, but a weak economy would continue to erode
demand for fuel.
Abdullah al-Badri told reporters at the World Economic Forum
in Davos, Switzerland that even an oil price of $50 a barrel was
still too low to encourage investment in new supply.
Besides the EIA report, traders were also watching for the
result of a two-day Federal Reserve meeting due out later in the
day.
Policymakers are expected to hold their target for official
borrowing costs in a range of zero to 0.25 percent.
[]
(Additional reporting by Chua Baizhen in Singapore and Peg
Mackey in London, editing by Anthony Barker)
