* U.S. crude stocks up, but distillates, gasoline down -API
* Cold weather, upbeat economic outlook offer support
* Firmer dollar limits oil's gains
(Adds Japan, S.Korea econ growth targets, updates prices)
By Judy Hua
SINGAPORE, Dec 30 (Reuters) - Oil edged up above $79 on
Wednesday, as falls in U.S. fuel stocks during a cold winter
and optimism over the global economy, countered a surprise rise
in crude inventories and the firm dollar.
Crude stocks in the world's biggest oil consumer rose by
1.7 million barrels last week, against expectations of a 2.0
million-barrel drawdown, data from industry group American
Petroleum Institute (API) showed. []
U.S. crude for February delivery <CLc1> rose 24 cents to
$79.11 a barrel by 0742 GMT in thin pre-holiday trade, after
settling 10 cents up on Tuesday. London Brent crude for
February <LCOc1> rose 30 cents at $77.94.
Oil has rallied 13 percent over the past two weeks and have
gained more than $32 so far this year, or 70 percent, though
still about 46 percent below record highs above $147 hit in
July last year.
"In anticipation of this week's API and EIA data, investors
were expecting some pretty substantial drawdowns, not just in
oil products but also in crude as refiners increased their
operations," said Ben Westmore, commodities economist at
National Australia Bank.
"A very rosy outlook had been pictured in the expectations
for a crude drawdown rather than an increase in crude stocks,
and so you had this moderation in the oil price."
Still, the rise in the industry figures paled in contrast
to the declines in crude stocks of 4.9 million barrels in the
week before last, data from the government Energy Information
Agency (EIA) showed. This followed slides of more than 3
million barrels in the previous two government reports.
Gasoline stocks fell by an unexpected 1.4 million barrels,
the API data showed, after a Reuters poll forecast a
500,000-barrel build. []
Distillate fuels fell by 3.5 million barrels as cold
weather hit the U.S. Northeast, the world's biggest heating oil
market. Heating oil stockpiles dropped by 2.6 million barrels.
Temperatures in the U.S. Northeast were seen average below
normal on Wednesday and near to above normal on Thursday and
Friday, while temperatures in Northwest Europe were forecast
near to below normal with energy demand for heating near to
above average much of the week and weekend. []
[]
EIA's weekly inventory data are due out at 10:30 am EST
(1530 GMT) on Wednesday.
"API data is generally just a lead to the EIA. That's the
one that really causes the market to move," Westmore said. "We
really need further drawdown of products and distillates stocks
in order to see oil price move higher."
STRONG DOLLAR CAPS OIL GAINS
The rise in oil was curbed by the strong dollar, which
posted gains against most major currencies, and climbed to a
two-month peak versus the yen, boosted by a report showing a
rise in U.S. consumer confidence this month. []
Oil has often eased this year when the dollar firms, making
crude more costly for holders of other currencies.
But the positive U.S. consumer confidence data for
December, which hit a three-month high as job market pessimism
eased and consumers' expectations touched a two-year high also
gave oil a lift. []
Asia's two leading economies and energy consumers are also
upbeat on the economy.
Japan's Finance Minister said on Wednesday he is convinced
the economy will grow next year, dismissing fears about a
double-dip recession, as the government announced a strategy
aiming for real GDP growth averaging over 2 percent in the next
decade by creating new demand in the environment, health and
tourism sectors. [] []
In South Korea, the president said the economy will
probably grow more than 5 percent next year, boosted by the
government's stimulus spending. []
Oil markets have looked to the wider economy this year for
signs of strength that could boost flagging fuel demand.
[]
(Editing by Ramthan Hussain)
