* U.S. gasoline futures hit highest since early May
* Crude oil, distillate stocks seen down last week
* Coming Up: API oil inventory data; 2130 GMT
(Updates throughout, previous SINGAPORE)
By Barbara Lewis and Claire Milhench
LONDON, Dec 21 (Reuters) - Oil prices rose for a third
straight session on Tuesday, supported by cold weather in the
United States and Europe and an expected drop in U.S.
inventories.
U.S. crude was 22 cents higher at $89.59 at 0903 GMT, within
sight of a high of $90.76 -- the strongest for more than two
years -- hit earlier this month.
Brent crude <LCOc1> traded 15 cents higher at $92.89 a
barrel.
"The cold weather has been an excuse for market participants
to push prices higher," said Eugen Weinberg of Commerzbank.
"I expect institutional investors will go for higher
commodities exposure (next year)."
Freezing weather has driven up heating fuel consumption in
northern Europe and the United States, where heating demand was
expected to be 4.6 percent above normal this week, according to
the U.S. National Weather Service. []
Some analysts, including Weinberg, have said increased
heating demand could be offset by reduced transport use as many
are forced to stay at home.
Snow and ice grounded flights and disrupted road and rail
links across northern Europe, stranding travellers and closing
schools.
However, expectation driving demand over Christmas and new
year holidays would boost U.S. consumption helped to increase
U.S. gasoline futures <RBc1> to a session peak of $2.3890 a
gallon, their highest since early May.
EXPECTED DECLINE IN CRUDE, DISTILLATE STOCKS
Weekly oil inventory reports for the United States were
expected to show gasoline stockpiles had risen, although crude
oil and distillate stocks, which include heating oil, fell last
week, according to a Reuters survey of analysts on Monday.
[]
U.S. oil inventory data from the American Petroleum
Institute is scheduled to be released later on Tuesday, with the
government's report following on Wednesday.
In China, the world's second biggest oil user after the
United States, kerosene imports for November hit an all-time
high of 861,388 tonnes, up nearly 61 percent a year ago,
official customs data showed on Tuesday. [].
A weakening dollar, which makes dollar-denominated
commodities relatively cheap, also provided support for oil
prices as it slipped against a basket of currencies <.DXY>,
although the euro was still under pressure after ratings agency
Moody's said it may cut the ratings on some Spanish banks.
[]
The festive and end-of-year period was expected to subdue
trading volumes this week when the market would face strong
resistance at $90 a barrel and support at $88, technical
analysts said.
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For a graphic, see:
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(Additional reporting by Seng Li Peng and Randy Fabi in
Singapore; editing by William Hardy)
