* U.S. crude hits two week high near $78 a barrel
* U.S. crude breaks 200-day moving average
* Brent crude tops $80 a barrel, first time since August
* U.S. data shows a fall in U.S. crude, product stocks
(Recasts, updates throughout, changes dateline from LONDON)
NEW YORK, Sept 29 (Reuters) - Oil jumped nearly 2 percent
on Wednesday, touching a two-week high after U.S. government
data showed a drop in U.S. crude and product inventories.
U.S. crude <CLc1> rose $1.37 to $77.55 a barrel at 12:53
p.m. EDT (1643 GMT), led by gains in heating oil futures
<HOc1>, after hitting a two-week high of $77.83 earlier.
The day's percentage gain was the biggest in 19 days.
Trade volume spiked just before midday as U.S. crude neared
the 200-day moving average around $77.50 a barrel, before
breaking above it. []
London Brent traded up $1.67 to $80.38 a barrel, punching
through $80 for the first time since August. []
U.S. distillate inventories dropped by 1.27 million barrels
in the week to Sept. 24, according to data from the U.S. Energy
Information Administration, counter to analyst expectations for
a 300,000 barrel build. []
Gasoline stockpiles in the world's top consumer fell by 3.5
million barrels and crude inventories dropped by 475,000
barrels, as stockpiles along the U.S. East Coast fell to the
lowest level since 1990. []
"The EIA drawdowns across the board were supportive,
particularly the surprise decline in gasoline stocks," said
Phil Flynn, analyst for PFGBest Research in Chicago.
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Graphic on U.S. crude's surge in volume early Wednesday:
http://link.reuters.com/caw95p
Graphic on key commodities' performance so far this year:
http://link.reuters.com/hun72k
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Crude found support earlier after HSBC's China Purchasing
Managers' Index hit a five-month high in September, pointing to
renewed, though moderate, momentum in the vast industrial
sector that is the backbone of the No. 2 oil consumer's
economy. []
Oil prices have remained relatively stable so far this
year, trading two-thirds of 2010 between $70 and $80 per
barrel, a range that oil producers in the Organization of the
Petroleum Exporting Countries have said they favor.
OPEC meets in Vienna next month and is expected to keep its
oil production targets unchanged.
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. []
Iran's OPEC governor expects oil prices to reach $80 per
barrel by the start of winter, assuming there are no major
changes in the market, news agency ILNA reported on Wednesday.
"By the beginning of the cold season an increase in the oil
price to around $80 is possible," Mohammad Ali Khatibi was
quoted as saying. []
(Reporting by Matthew Robinson, Gene Ramos, Janet McGurty,
Robert Gibbons, Robert Campbell and David Sheppard in New York;
Christopher Johnson and Joe Brock in London; Editing by Jim
Marshall)
