UPDATE 9-Oil jumps more than 4 pct on sharp US inventory draw

                                
 * U.S. oil demand decline slows, economy improving - API
                                
 * U.S. crude stocks down 8.4 mln barrels last week - EIA
                                
 * Chinese equity sell-off rattles global markets
 (Updates with settlement prices)
                                
 By Matthew Robinson
                                
 NEW YORK, Aug 19 (Reuters) - Oil surged more than 4 percent
on Wednesday after U.S. government data showed a steep drop in
crude imports and inventories in top consumer the United
States.
                                
 U.S. crude stockpiles plunged by 8.4 million barrels in the
week to Aug. 14 -- against analysts' forecasts for a build --
as imports dropped to the lowest level since September 2008 and
refiners hiked runs, according to data released by the U.S.
Energy Information Administration. [EIA/S]
                                
 Analysts said the import drop may have been caused by
companies holding more inventories in tankers offshore and
waiting for higher prices before importing the extra crude.
[ID:nN19525271]
                                
 Gasoline inventories also showed a bigger-than-expected
drop, while distillate stockpiles showed a surprise drop.
                                
 "The data is being viewed as bullish as all stock
categories fell more than expected," said Jim Ritterbusch,
president of Ritterbusch & Associates in Galena, Illinois.
                                
 U.S. crude <CLc1> settled up $3.23 at $72.42 a barrel.  
London Brent crude <LCOc1> rose $2.22 to settle at $74.59 a
barrel.
                                
 The American Petroleum Institute (API) said U.S. oil demand
in July showed signs of improvement, with demand down 3 percent
year-on-year last month compared with an average drop of around
6 percent in the first half of 2009. [ID:nWEQ001314]
                                
 "I think these (demand) changes are reflective of an
improving economy, but one must be cautious because these
changes are versus year-ago weak numbers," said API chief
economist John Felmy.
                                
 Slumping demand due to the global economic crisis sent
crude oil prices off record high prices near $150 a barrel hit
in July 2008 to below $33 a barrel in December. Expectations
for a potential rebound in the economy could increase fuel
consumption and have already helped lift prices.
                                
 Oil prices fell earlier on Wednesday, hitting a low of
$68.05 after a near 5 percent slump in Chinese shares sent
doubts rippling through global markets about the strength of
the world economic recovery. [ID:nN19116746]
                                
 U.S. stocks [.N] rose as energy shares jumped following the
EIA data, while the dollar fell [USD/].
                                
 Traders also watched for storms in the Atlantic Basin but
there no immediate threat was seen to U.S. oil installations in
the Gulf of Mexico.
                                
 Powerful Hurricane Bill, a dangerous Category 4 storm with
135 mph (215 kph) winds, raged across the open Atlantic on
Wednesday, days from land but on a path that could menace
Canada's eastern province next week. [ID:nN19474707]
 (Reporting by Matthew Robinson, Robert Gibbons and Gene Ramos
in New York; David Sheppard and Emma Farge in London; Jennifer
Tan in Singapore; editing by Jim Marshall)