* U.S. crude oil stocks rise less than expected
* Gasoline supplies fall more than forecast
* Equities fall on Wall Street and in Europe
(Recasts, updates prices, market activity)
By Alex Lawler
LONDON, Feb 25 (Reuters) - Oil jumped 5 percent to $42 a
barrel on Wednesday after a U.S. government report showed a
sharp drop in gasoline inventories in the world's top
consumer.
Gasoline supplies declined by 3.4 million barrels, more
than the expected drop of 100,000 barrels in the week to Feb.
20, the U.S. Energy Information Administration said in its
latest weekly report. []
"The big draw is in gasoline. Demand is up and refinery
runs are lower than expected. Demand is coming back," said Tom
Bentz, analyst at BNP Paribas Commodity Futures in New York.
Gasoline demand rose by 1.7 percent over the four weeks to
Feb. 20, the data showed.
U.S. crude <CLc1> rose $2.18 to $42.14 by 11:54 a.m. EST
(1654 GMT). London Brent crude <LCOc1> gained $1.40 to $43.90 a
barrel.
Crude oil stocks in the United States rose by 700,000
barrels, less than the 1.4 million-barrel increase predicted.
High U.S inventories have weighed on the U.S. benchmark,
contributing to its discount to Brent.
American Petroleum Institute data released on Tuesday
showed crude stocks rose 341,000 barrels last week
[]. Oil traders believe EIA data gives a fuller
picture because energy firms are required to respond to its
weekly survey.
Losses on equity markets limited oil's gains. In recent
months, the price of oil has become closely intertwined with
equities, a barometer of economic sentiment.
U.S. stocks fell on Wednesday as investors found little new
in a major speech by U.S. President Barack Obama on how he
planned to stabilize the economy, while gloomy home sales data
weighed on the market. []
Oil has fallen from a record high near $150 reached last
year, hit by the recession and weakening global fuel demand
which forecasters such as the International Energy Agency
predict will contract in 2009.
Also supporting oil were figures earlier this week showing
higher-than-expected compliance by the Organization of the
Petroleum Exporting Countries to agreed production cuts, and
the prospect of a new reduction.
OPEC member Angola will produce 1.656 million barrels of
oil per day in 2009, down from a high of 2.0 million bpd last
year, to comply with OPEC cuts, state-owned oil firm Sonangol
said on Wednesday.
Venezuela expects to propose a new OPEC output cut at the
group's March 15 meeting in an effort to bolster oil prices,
according to Finance Minister Ali Rodriguez, a former OPEC
president.
(Additional reporting by Annika Breidthardt in Singapore and
Matthew Robinson in New York; Editing by James Jukwey and David
Gregorio)
