(Adds missing Reuters Instrument Code in fourth paragraph)
* Sharp falls in oil product stocks suggest demand recovery
* US industrial output, consumer sentiment data to offer
cues
* Equities rally, dollar weakness to be price-supportive
(Updates prices, adds Nigeria, new OTC rules)
By Jennifer Tan
SINGAPORE, Oct 16 (Reuters) - Oil was up for a seventh
session just below $78 a barrel on Friday, after touching a
one-year high earlier on an unexpectedly steep drop in U.S. oil
product stocks and weakness in the dollar.
Year highs for U.S. stocks also helped oil power towards
its best week of gains in nearly two months, even though
investors were disappointed by results from top U.S. banks
Goldman Sachs and Citigroup. []
The release of U.S. September industrial production and
capacity utilisation data, and a report on consumer sentiment
for October, will offer more insight into the strength of the
world's largest economy and top oil user.
U.S. crude for November delivery <CLc1> rose 35 cents to
$77.93 a barrel by 0610 GMT, off a fresh year-high of $78.17
earlier, and Thursday's settlement price of $77.58. London
Brent crude <LCOc1> was up 21 cents at $76.44.
Oil is headed for a gain of 8.5 percent this week, marking
its longest weekly winning streak since July, but there are
some worries about how long the rally can be sustained.
"A correction is on the cards. I would expect profit taking
to set in next week, and oil to retreat to the mid- to
low-$70s," said Ben Westmore, commodities analyst with the
National Australia Bank.
"Fundamentals remain weak. Global inventories are still
pretty high, and unless we see the supply overhang being worked
off, an oil price in the high-$70s is really not justified."
A move by Washington to approve new rules for
over-the-counter (OTC) derivatives could hurt trading volumes,
analysts said, although more details would be needed to
ascertain the impact.
The U.S. House of Representatives Financial Services
Committee voted in favour of slapping new rules on the largely
unpoliced $450-trillion OTC derivatives market, widely blamed
for amplifying last year's financial crisis. []
Oil's 3.2 percent gain on Thursday came after U.S. Energy
Information Administration data showed gasoline inventories
fell by 5.2 million barrels last week, against analyst
expectations for an increase. Distillate stockpiles also fell
unexpectedly, while crude stocks rose 400,000 barrels, smaller
than the forecast of a 700,000-barrel build. []
Stronger U.S. weekly jobless claims suggested the job
market might be stabilising, which together with positive
earnings results pushed the dollar to a 14-month low against
the euro on Friday. [] []
After results from JPMorgan and Goldman Sachs earlier this
week, earnings from Bank of America and General Electric are
due on Friday.
Industrial production and capacity utilisation data for
September is expected to show a 0.2 percent rise in production,
while the Reuters/University of Michigan Surveys of Consumers
will release its October preliminary consumer sentiment index.
On the supply front, unrest in OPEC member Nigeria,
Africa's top oil and gas exporter, could also underpin prices.
Nigeria's main militant group, the Movement for the
Emancipation of the Niger Delta (MEND), ended its
three-month-old ceasefire on Friday and threatened to resume
attacks against Africa's biggest oil and gas industry.
[]
(Editing by Michael Urquhart)
