* Oil retains gains from Tuesday's near $3 a barrel jump
* Stocks rally, offer support above $77, dollar steady
* API data due later in session
(Updates prices, adds comment)
By Chris Baldwin
LONDON, Feb 17 (Reuters) - Oil held above $77 a barrel on
Wednesday, consolidating after Tuesday's rally, although gains
were tempered by the dollar's strength following positive U.S.
housing data.
U.S. crude for March delivery <CLc1> rose 15 cents to $77.16
a barrel at 1426 GMT, after closing 3.9 percent higher on
Tuesday, the highest percentage gain since Sept. 30 when it rose
5.8 percent.
London Brent crude for April <LCOc1> climbed 32 cents to
$76.00 a barrel.
"We had a very strong rally on Tuesday, and oil has been
consolidating above yesterday's range for most of the day," said
broker Christopher Bellew at Bache Commodities in London.
U.S. housing starts rebounded more strongly than expected to
their highest in six months in January, while permits fell
slightly less than forecast, a government report showed on
Wednesday.[]
The U.S. dollar rose against the Japanese yen <JPY=> and the
euro <EUR=> after the housing data emerged, and analysts said
signs of improvement in the U.S. economy will support the
dollar.[]
Earlier in the session, the dollar had struggled to rise
from Tuesday's one-week low against the euro as traders booked
profits from a rally in the single European currency as focus
shifted away from Greece's fiscal woes. []
"If the housing market recovers, and the economy is good,
and demand returns and the dollar strengthens, that is
short-term bearish but long-term bullish for oil," Bellew said.
Strength in the U.S. dollar typically pressures oil prices
by discouraging non-U.S. investor interest in dollar-denominated
commodities.
API DATA
Crude inventories in the United States were expected to have
risen by 1.9 million barrels in the week ended Feb. 12, as
imports that had been delayed by weather along the Gulf Coast
came ashore, an initial Reuters poll found. []
"It might also be of interest whether the record-low
refinery utilization has seen a counter movement as was shown by
the (Department of Energy's own oil stock data) last week," said
analyst Carsten Fritsch at Commerzbank.
"Demand from refineries has to increase to see a meaningful
reduction in the crude-oil inventory overhang."
Distillate stocks, which include heating oil and diesel,
fell 1.6 million barrels, with demand for heating fuel seen
higher after two heavy snowstorms hit the U.S. East Coast, while
gasoline supplies rose 1.6 million barrels, the poll showed.
The report from industry group American Petroleum Institute
(API) will be released at 2130 GMT on Wednesday -- delayed one
day due to a holiday -- while the Energy Information
Administration's (EIA) data is due at 1600 GMT on Thursday.
Tensions between the U.S. and Iran may continue to support
prices. President Mahmoud Ahmadinejad said any country that
tried to impose new sanctions on Iran would regret its actions,
as the U.S. and Russia voiced concerns about Tehran's nuclear
programme.[]
(Additional reporting by Seng Li Peng in Singapore, editing by
Amanda Cooper)
