Oil rises as U.S. stockpiles drop; winter fuel demand eyed

                                
   * Dollar weakness to provide support for prices -analysts
                                
 * Technicals show price rise to $78.80 [ID:nSGE68S00J]
                                
 * Coming Up: U.S. EIA weekly oil inventories; 1430 GMT
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Sept 29 (Reuters) - Oil rose on Wednesday after
an industry report showed crude and winter fuel stockpiles
declined last week in top-consumer the United States, reducing
a surplus that has weighed on market sentiment for months.
                                
 U.S. crude for November <CLc1> rose 26 cents to $76.44 a
barrel at 0234 GMT, while ICE Brent for the same month <LCOc1>
climbed 48 cents to $79.19.
                                
 As the Northern Hemisphere winter approaches, "there will
be a pick-up in demand, but how much that tightens the market
is the important thing for the oil price," said Ben Westmore, a
commodities analyst at National Australia Bank.
                                
 U.S. inventories of distillates, a fuel category that
includes heating oil and diesel, unexpectedly dropped by 2.8
million barrels in the week to Sept. 24, pulling stockpiles 3.5
million barrels below year-ago levels, the American Petroleum
Institute (API) reported late on Tuesday. [ID:nN28274688]
                                
 Crude stocks fell by 2.4 million barrels, the API said,
eight times as much as the 300,000-barrel decline forecast in a
Reuters survey of analysts. Still, they remained 22 million
barrels higher than in the same week a year ago.
                                
 "On the inventory side, with the API data we saw crude and
distillate stockpiles falling, but the impact on the market
will depend on the EIA numbers," Westmore said. "It's more that
the bearish information will have less effect."
                                
 Government statistics on inventories and demand from the
Energy Information Administration (EIA) will follow on
Wednesday at 1430 GMT.
                                
 RECORD INVENTORIES
                                
 Total U.S. petroleum inventories, including crude and
products, rose to 1.144 billion barrels in the week to Sept.
17, a record when measured on a weekly basis, a series of data
that the EIA started compiling in 1990.
                                
 U.S. crude imports are still recovering from the shutdown
of two major Enbridge <ENB.TO> pipelines that ship Canadian
crude to refiners in the Midwest. Line 6A was shut from Sept.
9-17. Line 6B, which was closed in July, resumed operations on
Sept 27.
                                
 U.S weekly retail gasoline demand fell versus the previous
week and was lower against the year-ago period, MasterCard said
on Tuesday. [ID:nN28214687]
                                
 Gasoline inventories rose 3 million barrels last week,
according to the API, six times as much as expected. [EIA/S]
                                
 Qatar Oil Minister Abdullah al-Attiyah said on Tuesday he
does not expect OPEC to make any changes in its production
output quotas when the group meets in October. [ID:nTOE68R06Y]
                                
 OPEC crude oil supply has fallen so far this month to the
lowest level since November 2009 due to reduced output from
Angola and smaller declines in the United Arab Emirates and
Iran, a Reuters survey showed on Tuesday. [ID:nLDE68R1VK]
                                
 But oil prices on Tuesday slipped after U.S. consumer
confidence fell to its lowest level in seven months in
September, underscoring lingering worries about the strength of
the economic recovery. [ID:nN28262737]
                                
 In a sign of stabilisation in the housing market, U.S. home
prices hovered above multi-year lows without the help of the
homebuyer tax credit that ended in April.
                                
 A top Federal Reserve official said on Tuesday that he has
yet to make up his mind whether further easing in monetary
policy is needed, despite a weakening U.S. economy and some
risk of deflation. [ID:nN28169964]
                                
 DOLLAR SUPPORT
                                
 Japan's Nikkei average clawed 0.4 percent higher on
Wednesday, with exporters such as Canon Inc <7751.T> gaining
after Wall Street posted modest gains on Tuesday. [.T]
                                
 The euro surged to a five-month high against the dollar on
Tuesday on expectations the Fed will print money to buy assets.
[USD/]
                                
 "The weaker U.S. dollar is having an impact across
commodities," Westmore said. "But there is concern that further
financial troubles related to eurozone debt may be tempering
oil demand at the margin."
                                
 A sliding dollar on Tuesday helped gold extend a
record-setting streak that has seen the shiny metal gain nearly
20 percent this year and buoyed other commodities by
discounting them for non-U.S. investors. [COM/WRAP]
                                
 Oil investors kept watching any possible weather threat to
supplies as Tropical Depression 16 neared tropical storm
strength in the Caribbean Sea. But it was expected to drift
northeast and away from Gulf of Mexico energy infrastructure.
[ID:nN28181267]
 (Editing by Ed Lane)