* EIA reports product stocks fall, small crude rise
* U.S. dollar weakens against basket of currencies
* U.S. equities rise on bank performances
(Recasts, adds detail throughout, changes dateline from
LONDON)
By Edward McAllister
NEW YORK, Oct 21 (Reuters) - Oil jumped 3 percent to over
$81 a barrel on Wednesday to its highest level in a year due to
a drawdown in U.S. refined oil inventories and as a rise in
U.S. equities showed optimism about the economy and a potential
rebound in energy demand.
Weekly data from the Energy Information Administration
revealed a larger-than-expected 2.3-million-barrel draw in
gasoline stocks in the world's largest energy consumer last
week, while crude inventories rose 1.3 million barrels, less
than the expected 1.8 million-barrel rise. []
U.S. crude for December <CLc1> rose $2.33 to $81.45 a
barrel by 1:05 p.m. EDT (1705 GMT). Brent crude <LCOc1> added
$2.44 to $79.68.
"The gasoline draw was bullish, and the same for
distillates, with refinery rates nearly unchanged," said Mike
Zarembski, senior commodities analyst for OptionsXpress in
Chicago.
However, traders had their eyes on the weakness of the
dollar and stronger equities as price drivers, rather than
oil's fundamentals of demand and supply.
"As long as the dollar is down and stocks are up, traders
want to buy energies. Everyone is watching the dollar now and
that is what's driving crude prices. There is nothing in this
report to change that," Zarembski added.
Wall Street gained on Wednesday as results from banks,
including Morgan Stanley, topped expectations and on increased
optimism about the technology sector's profit outlook. []
The dollar sank against a basket of other currencies as
expectations that U.S. interest rates will remain very low
weighed on the greenback. The euro rose above $1.50 for the
first time since August 2008. []
A falling dollar makes oil relatively cheap to holders of
other currencies.
The weak dollar and anticipation of future economic
recovery have been the main drivers of the oil price rally this
year, rather than market fundamentals of supply, demand and
inventories.
This year, front-month crude on the New York Mercantile
Exchange has risen around 120 percent from the Dec. 31 2008 low
of $36.94 to the current session high on Wednesday to above
$81.
China's State Council voiced confidence that China's
economy has recovered from the global financial crisis,
performing better than expected in the first nine months of the
year. []
The International Energy Agency, which represents 28
industrialized countries, has warned that the fast rise in
prices could pose a risk to global economic
recovery.[]
But Nigeria's oil minister, Rilwanu Lukman, said $80 was a
fair price for oil and one that should encourage investment in
new supplies. []
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Alex Lawler in London, Nick Trevethan in Singapore and
Reuters energy desk in New York; editing by Marguerita Choy)
