* Oil hits highest since early May after EIA report
* Oil product inventories fall, crude stocks rise
* Fed prospects lift energy prices on demand outlook
(Recasts, updates prices, market activity, adds analyst
comments, new byline, changes dateline from previous LONDON)
By Gene Ramos
NEW YORK, Oct 6 (Reuters) - Crude oil hit a new five-month
high on Wednesday as a larger-than-expected drawdown in U.S.
gasoline stockpiles and a sinking dollar prompted investors to
bid up energy futures.
The weaker dollar has spurred money flows into oil and
other commodities as investors weigh growing prospects for more
U.S. monetary easing, which they see improving oil demand in
the world's biggest energy-consuming country.
U.S. crude for November delivery <CLX0> rose 45 cents to
$83.27 a barrel by 1:15 p.m. EDT (1715 GMT), up for the fifth
day in six. It surged to $84.09 earlier. In London, ICE
November Brent <LCOX0> gained 30 cents at $85.14.
U.S. November gasoline <RBX0> gained more than 2 cents to
$2.1461 a gallon, after hitting an eight-week high of $2.1650.
Data from the U.S. Energy Information Administration showed
gasoline inventories fell 2.65 million barrels last week, while
distillate stocks, which include heating oil and diesel fuel,
dropped by 1.12 million barrels.
Crude stocks rose 3.1 million barrels, 10 times more than
expected.
"The product drawdowns set the tone for the report and will
add to the sentiment that demand may be picking up again after
the lull experienced in mid- to late summer," said John
Kilduff, partner at Again Capital LLC in New York.
"It's a solid fundamental input, which adds to the
macroeconomic forces at work in the energy markets highlighted
by expectation of the coming monetary easing measures by the
U.S. Federal Reserve," Kilduff said.
U.S. ECONOMY, PORT TROUBLES
While growth accelerated in the key U.S. services sector
last month, that in China and Europe slowed, with those sectors
in Ireland and Spain tipping back into contraction. That
painted a mixed global picture, but showed the U.S. economy
steering clear of another recession. []
However, U.S. labor market weakness is hobbling the
economy's recovery from its worst downturn since the 1930s, and
Friday's jobs report could determine whether the Federal
Reserve will ease policy further at its Nov. 2-3 meeting.
[]
In France, strikers were blocking 32 crude and oil products
vessels at the Fos-Lavera terminal near the Mediterranean port
of Marseille, one of the world's biggest ports, as the strike
went into its tenth day. []
The strikers will meet unions of nearby refineries on
Wednesday over possible joint action, raising the prospect of a
halt to output and a further jump in fuel prices. European
gasoline makes up a large part of northeastern U.S. supply.
On the U.S. Gulf Coast, the northern part of the Houston
Ship Channel was reopened to ships for the first time in three
days after a barge accident on Sunday closed the busy waterway.
[]
At least half of 40 ships now inbound were tankers headed
for four refineries that provide 4.9 percent of U.S. refining
capacity and have been without tanker crude since Sunday.
(Additional reporting by Robert Gibbons in New York, David
Turner in London; Alejandro Barbajosa in Singapore; Editing by
Dale Hudson)
