* US oil inventories drop unexpectedly
* Suez Canal operations unaffected by worker strike
* China rate hike weighs on oil prices
* Coming up: U.S. EIA petroleum inventory report, 1530
PERTH, Feb 9 (Reuters) - U.S. crude oil prices rose slightly
on Wednesday after news that oil inventories in the United
States, the world's largest oil consumer, dropped unexpectedly
and ship movements in the Suez Canal remained unaffected by the
unrest in Egypt.
The American Petroleum Institute reported an unexpected
drawdown in U.S. crude stocks last week, contrary to analyst
expectations.
Workers at companies in the Suez Canal Zone struck over pay
and work conditions, but operations and ship movements were
unaffected.
China's decision to raise its interest rates for the second
time in just over six weeks to tame inflation weighed on crude
futures.
FUNDAMENTALS
* On the New York Mercantile Exchange, crude for March
delivery rose 58 cents to $87.52 a barrel at 0049 GMT.
The contract closed at $86.94 in New York.
* In London, ICE Brent crude's Brent's premium against U.S.
benchmark West Texas Intermediate hit $12.98 when it closed at
$99.92 a barrel.
* The API said that for the week to Feb. 4, U.S. crude
stocks fell 558,000 barrels, distillate stocks declined 538,000
barrels, gasoline stocks rose 3.2 million barrels and refinery
utilization rose 0.1 percentage point.
* An expanded Reuters poll forecast an increase of 2.4
million barrels in crude stocks last week. Distillate stocks
were forecast down 1.2 million barrels and gasoline stocks up
2.5 million barrels while refinery utilization was expected to
show an 0.2 percentage point decline. .
* Egyptians staged one of their biggest protests yet on
Tuesday, demanding President Hosni Mubarak step down now, their
wrath undiminished by the vice president's announcement of a
plan to transfer power.
* Around 3,000 workers in companies in the Suez Canal Zone
struck over pay and work conditions, but an official said the
work stoppage will not affect operation and ship movements at
the canal.
* U.S. retail gasoline demand fell last week for the first
time in a month after a massive snowstorm hit a large swath of
the country, clogging roadways and curbing long road trips, a
weekly report from MasterCard Advisors showed.
* China raised interest rates on Tuesday for the second time
in just over six weeks, intensifying a battle in the
fast-expanding economy against stubbornly high inflation that
threatens to unsettle global markets.
* Colombia's 48,000 bpd Transandino oil pipeline has been
halted by two suspected rebel bomb attacks, but exports have not
been affected, Ecopetrol said.
* The U.S. Energy Information Administration said more
supply will be needed as the world will consume about 140,000
bpd more in oil than it had forecast last month, with demand now
expected to average a record 88.16 million barrels per day this
year.
* Saudi Arabia is also pumping more crude than previously
thought, about 100,000 barrels per day extra during both
November and December, the EIA report showed.
MARKETS NEWS
* Japan's Nikkei average extended its gains for a fourth day
and hit a fresh nine-month high on Wednesday, with Toyota Motor
Corp expected to lift the market after
better-than-expected earnings.
* The dollar eased and the Swiss franc stayed under pressure
early on Wednesday as markets took China's latest interest rate
hike in their stride, a move that helped the Australian dollar
hold well above parity against the greenback.
* Gold held steady on Wednesday after rising 1 percent in
the previous session on inflation fears, technical buying after
key resistance levels were broken and a rise in Chinese interest
rates.
* Copper bounced to a slightly firmer finish on Tuesday,
absorbing an initial hit from China's surprise interest rate
hike which failed to dent the industrial metal's robust demand
prospects for this year.
UPCOMING DATA/EVENTS (GMT)
0300 Japan PAJ weekly oil inventory data Feb 5
0500 Japan Consumer confid. index Jan 2011
1330 USDA World ag supply/demand ests Feb 2010
1330 USDA Crop production
1530 U.S. EIA petroleum inventory Weekly
(Reporting by Rebekah Kebede in PERTH, Gene Ramos and Robert
Gibbons in NEW YORK; Editing by Himani Sarkar)
