* U.S. crude rallies after almost 6 pct drop on Wednesday
* Big build in U.S. crude oil stocks; Cushing near capacity
* China central bank says to keep loose monetary policy
(Updates prices, detail)
By Christopher Johnson
LONDON, July 30 (Reuters) - Oil rose towards $64 a barrel on
Thursday, supported by stock markets in Europe and Asia after
better than expected corporate results.
The rally followed a drop of almost 6 percent on Wednesday
in the wake of U.S. data showing a big jump in crude inventories
and on concerns over the outlook for Chinese economic growth
following a fall in its stock markets.
The Energy Information Administration (EIA) said on
Wednesday crude stocks in the world's top energy consumer rose
an unexpected 5.1 million barrels to 347.8 million while
refineries scaled back faster than anticipated. []
U.S. light crude oil futures <CLc1> rose 45 cents to $63.80
per barrel by 0947 GMT, after dropping 5.8 percent on Wednesday,
the biggest daily percentage fall since April 20. London Brent
<LCOc1> gained 90 cents to $67.43.
"Stock markets are higher this morning and we had a big
sell-off, maybe too big a sell-off, on crude yesterday," said
Christopher Bellew, oil broker at Bache Commodities in London.
"Certainly we can live with crude between $60 and $70 per
barrel and we have come down towards the bottom end of that
range this week," he added.
Asian and European equities rallied on Thursday on good
corporate results. [] []
In Europe, BT <BT.L> and France Telecom <FTE.PA> both posted
better than expected results, while in Asia the Nikkei average
hit its highest close in nine months on Thursday, lifted by
Honda Motor <7267.T> and Nissan Motor <7201.T> profits.
CUSHING
The stronger equities markets helped turn around some of the
heavy losses seen on Wednesday after the U.S. EIA data.
Distillate stocks rose to the highest level in nearly 25
years, while gasoline stockpiles fell, the EIA said.
Over the past four weeks, U.S. fuel consumption has dropped
4.1 percent from year-ago levels, led by a 10.7 percent decline
in demand for distillates.
Inventories at Cushing, Oklahoma, a large storage hub and
delivery point for U.S. crude futures, are now close to operable
capacity, industry sources say.
A glut at Cushing earlier this year prompted U.S. crude
futures to trade at exceptional discounts to Europe's Brent
crude. U.S. light crude oil for September delivery was
discounted by more than $3.60 a barrel to Brent on Thursday.
Traders said they were also watching for any measures by
China that could impact industrial growth and fuel demand.
Chinese shares suffered their deepest daily decline in eight
months on Wednesday on fears that Beijing might move to tighten
money supply and banks could begin to restrict lending. []
China's central bank said on Thursday it would keep a loose
monetary policy to consolidate its recovery. []
Adding to uncertainty in the oil market was news the U.S.
Commodities Futures Trading Commission was considering
implementing position limits for some commodity futures after
wide price swings that have raised concern over speculation.
Some traders have said they are worried U.S. regulators may
impose limits on futures positions, which could push investors
away from exchange-based oil trading in contracts such as NYMEX
U.S. light crude oil.
Goldman Sachs said the spreads between U.S. light crude
futures (WTI) months could remain under pressure near-term, but
it said it stayed bullish in the medium-term.
"We believe that these difficulties will prove temporary and
continue to expect tighter fundamentals later this year to lend
support to time-spreads, pushing WTI crude oil prices to $85 per
barrel by year end," it said in a note to clients.
(Additional reporting by Ramthan Hussain in Singapore; editing
by Anthony Barker)
