* US distillate stocks drop; crude, gasoline rise - EIA
* French unions extend refinery strikes
* IAEA fears Iran working now on nuclear warhead
(Recasts, updates throughout)
By Rebekah Kebede
NEW YORK, Feb 18 (Reuters) - Oil rose more than 2 percent
to hit a one-month high over $79 a barrel on Thursday,
bolstered by a government report showing a drop in U.S.
distillate supplies and concerns OPEC member Iran may be
working to develop a nuclear-armed missile.
U.S. crude oil futures <CLc1> settled up $1.73 at $79.06 a
barrel, the highest settlement since Jan. 14. Brent crude
<LCOc1> gained $1.51 to settle at $77.78 a barrel.
Crude found support from U.S. distillate inventories, which
fell by 2.9 million barrels last week, according to weekly data
from the U.S. Energy Information Administration, nearly double
the 1.5 million barrel draw forecast by analysts. []
"The bottom line is that the Department of Energy report
had a number of little kernels of bullish information, starting
with the distillate draw being larger than expected," said
Peter Beutel, president, Cameron Hanover, New Canaan,
Connecticut.
Heating oil stocks fell 1.4 million barrels as chilly
weather on the Eastern Seaboard increased demand for the fuel,
the EIA data showed. Crude oil and gasoline inventories rose
3.1 million barrels and 1.7 million barrels, respectively,
above analysts' expectations.
Gasoline futures led the NYMEX oil complex.
"There is also the seasonal factor in that people are
looking at the upcoming driving season, and that's helping
boost gasoline," said Richard Ilczyszyn, senior market
strategist, at Lind-Waldock in Chicago.
The market was also watching news that the U.N. nuclear
watchdog fears Iran may be working now to develop a
nuclear-armed missile, throwing independent weight behind
Western suspicions of an active Iranian weapons program and
stirring concerns about a potential supply disruption from the
oil-exporting nation. []
Oil prices were also supported by news that workers at
Total's <TOTF.PA> six French oil refineries extended their
strike action into a second day on Thursday, protesting the
potential permanent closure of one of the plants.
Workers plan to halt production at five other refineries in
the next 24 hours, sources told Reuters. [] Total
is a major European gasoline exporter to the United States.
The gains in oil came despite a rise in the dollar against
the euro as mixed data highlighted the fragility of the U.S.
economy but failed to offset the greater concern on the outlook
for the euro zone. [] A stronger greenback typically
depresses oil prices as it makes it more expensive for
investors to buy dollar-denominated commodities, such as oil.
Demand for the greenback fell following an unexpected jump
in weekly U.S. jobless claims, while the government separately
reported a higher-than-expected rise in January producer
prices. For details see [] and [].
U.S. stocks rose as investors viewed earnings and favorable
brokerage comments on companies and some of the economic data
as signs that an economic rebound will continue. []
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Ikuko Kurahone in London, Seng Li Peng in Singapore;
Editing by Jim Marshall)
