UPDATE 1-Oil set for 5 pct weekly gain on U.S. demand

                                
   * Oil heads for fourth-biggest weekly gain of 2010
                                
 * Coming Up: U.S. wholesale inventories May; 1400 GMT
                                
 * For a technical view, click: [ID:nSGE668005]
 (Adds China data preview, updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, July 9 (Reuters) - Oil rose 0.5 percent on
Friday, heading for its biggest weekly gain since May, after
data showed robust U.S. demand growth and falling inventories,
while positive economic indicators lifted sentiment across
markets.
                                
 Asian stocks rallied for a second day on Friday and the
euro held near two-month highs, following a fall in U.S.
jobless claims to a two-month low and an upbeat view of the
euro zone's recovery from the European Central Bank.
[MKTS/GLOB]
                                
 A stronger U.S. economy would bolster crude demand, with
data on Thursday showing the nation's demand for distillates
including diesel soared 30 percent in the past four weeks from
a year earlier.
                                
 Also, U.S. crude inventories fell 5 million barrels last
week, more than twice as much as expected, the Energy
Information Administration said. [EIA/S]
                                
 "Oil was probably sold too heavily to the downside," said
Peter McGuire, managing director at CWA Global Markets in
Sydney. "Distillate usage is a wonderful indicator for tracking
industrial production, it's a great sign of a turnaround."
                                
 U.S. crude for August <CLc1> rose 37 cents to $75.81 a
barrel by 0503 GMT, after touching an intraday peak of $76 on
Thursday, the highest price this month. ICE Brent <LCOc1>
gained 33 cents to $75.04.
                                
 Oil was headed for a 5 percent increase this week, its
fourth-biggest weekly gain of the year. For a graphic, click:
 http://graphics.thomsonreuters.com/gfx/ABE_20100907103202.jpg
                                
 But front-month WTI was still well below a 19-month peak
above $87 reached in early May, having rebounded sharply from a
trough below $65 on May 20.
                                
 EQUITY COMEBACK
                                
 Wall Street staged a late-day surge on Thursday, extending
a rally to three days on data showing U.S. first-time jobless
claims fell to their lowest in two months, and after a handful
of large retailers reported solid sales.
                                
 During the previous earnings season, oil was trading above
$80 a barrel.
                                
 "With equity markets rebounding, there is a little bit more
positive sentiment," McGuire said.
                                
 The oil market awaits Chinese trade data, to be published
on Saturday, for further price direction.
                                
 Year-on-year import and export growth probably slowed last
month from the sizzling pace set in May, in large part
reflecting a higher base of comparison as the global recovery
gained strength around the middle of last year. [ID:nSGE6660AG]
                                
 Oil inventories at the U.S. Cushing, Oklahoma, crude oil
hub, the delivery point for NYMEX futures, fell more than
350,000 barrels in the week to July 6 to 38.9 million barrels,
figures from energy industry data provider Genscape showed on
Thursday. [ID:nNLL8IE68I]
                                
 The euro received a boost from details about Europe's bank
stress tests, which heartened investors who saw criteria for
the checks were no worse than markets expected.
[ID:nLDE6670LN]
 (Editing by Michael Urquhart)