* Oil up nearly 4 pct, biggest one-day gain since Feb. 16
* US crude stocks +2.4 mln bbls; gasoline -200,000 bbls
* Cushing stocks fall from record, lifting front spread
* Kuwait says oil at $65 will draw OPEC attention
* Coming up: Q1 US GDP, jobless claims data due Thursday
(Updates prices, market activity, changes byline and dateline,
previously LONDON)
By Gene Ramos
NEW YORK, May 26 (Reuters) - Oil prices jumped nearly 4
percent on Wednesday, their biggest gain in over three months,
as bargain-hunting lifted Wall Street and government data
showed a big bounce in U.S. oil demand.
A cautious recovery in risk appetite aided oil along with
U.S. stocks and other commodities as traders reckoned a
weeks-long rout may have run its course, with positive
sentiment and strong manufacturing data overshadowing a
larger-than-expected rise in U.S. crude oil stockpiles.
U.S. crude <CLc1> rose $2.56, or 3.7 percent, to $71.31 a
barrel by 1:15 p.m. EDT (1715 GMT), lifting the July contract
from Tuesday's low near $68, its weakest since July 2009.
London Brent crude <LCOc1> gained $1.97 to $71.52, ending a
nine-session losing streak fueled by intensifying fears that
the euro zone debt crisis could undermine the economic
recovery.
"The concerns that European economies are at risk of a
double dip appear to have receded, some of the selling appears
to have been exhausted, and positive economic indicators are in
the ascendant in relation to apparent deleveraging of risk by
financial markets," JP Morgan analyst Lawrence Eagles said.
Oil prices have dived nearly 23 percent since a 19-month
high at the start of this month, plunging below the $70 mark
that OPEC has said is the low end of its preferred price range,
with some ministers beginning to express concern over the pace
of the market's steepest decline since the financial crisis.
Kuwait's Oil Minister Sheikh Ahmad al-Abdullah al Sabah
said the Organization of the Petroleum Exporting Countries
would take notice if oil fell to $65 a barrel.
Shokri Ghanem, chairman of Libya's National Oil Corp, told
the Reuters Global Energy Summit OPEC members are talking
informally about the drop in oil prices, and are urging each
other to comply more closely with agreed supply targets.
[]
Apart from the risk of OPEC action, oil was also aided by
over 1 percent gains in U.S. stock markets after data showing
that new orders for long-lasting U.S. manufactured goods rose
more than expected in April spurred bargain buying. []
The euro fell against the dollar for a third straight day
on nagging fears about the European debt crisis.
INVENTORIES
Oil extended those gains after data from the U.S. Energy
Information Administration on Wednesday showed demand for oil
products in the United States over the past four weeks is up
almost 7 percent from a year ago. []
The front end of the U.S. futures curve also gained on data
showing that crude oil stocks at the Cushing, Oklahoma,
delivery point fell for the first time in 10 weeks, with the
front-month crude spread <CLN0-Q0> rising 26 cents to put July
at a $1.09 discount to August, its strongest in over a month.
Even so, total U.S. crude oil inventories continued to
increase, rising 2.4 million barrels last week and extending a
buildup for 16 of the past 17 weeks.
Gasoline stocks fell by 200,000 barrels, as predicted by
the market, while distillate stocks, including diesel and
heating oil, posted a surprise fall of 300,000 barrels.
"Overall (it is) a slightly bearish number, but right now
everyone is so relieved that we had the recovery in the equity
markets yesterday and spilling over into today, that oil is
near its highs here," said Mike Zarembski, senior commodities
analyst at optionsXpress in Chicago.
The Trans-Alaska Pipeline, partly owned by BP <BP.L>, shut
down on Tuesday after spilling several thousand barrels of
crude oil into backup containers, drastically cutting supply
down the main artery between refineries and Alaska's oilfields.
[]
Jean-Jaques Mosconi, head of strategy at French oil major
Total <TOTF.PA>, told the Reuters Energy Summit that prices
were unlikely to fall far below $70 a barrel as global demand
was increasing.
"Europe is the big issue here. China is doing well, India
is growing, the Middle East is growing. Even the U.S. is
recovering," Mosconi said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For Mosconi interview with Reuters Insider, click:
http://link.reuters.com/zug36k
For a technical view, click: []
For news from the Reuters Global Energy Summit, click:
http://www.reuters.com/summit/GlobalEnergy10?pid=500
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(Additional reporting by Robert Gibbons and Ed Mcallister in
New York; David Sheppard in London; and Alejandro Barbajosa in
Singapore; editing by Jim Marshall)
