* Oil claws back up on short-covering after fall to 2010
low
* U.S. data show rise in fuel and crudes stocks
* Eyes on European heating demand as cold prevails
(Adds Brent open interest, updates prices)
By Alejandro Barbajosa
SINGAPORE, Jan 14 (Reuters) - Oil edged up towards $80 a
barrel on Thursday as traders moved to cover short positions,
taking advantage of a drop to 2010 lows the previous day on
surprise gains in U.S. distillates and crude stocks.
Crude inventories in the United States climbed by a
larger-than-expected 3.7 million barrels last week, while
distillates posted an increase of 1.4 million barrels, against
expectations for a decline, the U.S. government Energy
Information Administration (EIA) said on Wednesday. []
U.S. crude for February <CLc1> rose 25 cents to $79.90 a
barrel at 0531 GMT after trading as low as $78.37 on Wednesday,
the lowest intraday price this year, following the release of
the EIA stockpile data. Prices had reached a 15-month intraday
high of $83.95 a barrel on Monday.
London Brent crude for February <LCOc1> gained 28 cents to
$78.59 a barrel, after having touched a 2010 low of $77.04 on
Wednesday.
"I could not find any bullish news from a fundamental point
of view, but I suppose a lot of short covers came in," said Ken
Hasegawa, a commodity derivatives manager at brokerage Newedge
in Japan.
"Prices are moving in a $75-$85 range. It was very good
timing to buy back the market," he added, referring to the
price fall after the inventory figures were published.
Open interest across the Brent crude futures curve climbed
to a record of almost 818,000 lots on Jan. 12, the ICE exchange
showed on its website.
(https://www.theice.com/marketdata/reports/ReportCenter.shtml)
That indicated participants were holding an unusually high
number of open price bets. The price drop to the year's lows
provided an opportunity to close some of those positions before
the expiry of the February contract later on Thursday.
HEATING FUEL STOCKS
U.S. oil stockpiles have bulged over the past 18 months as
the economic crisis has cut energy demand. Recent icy weather
over much of the world's largest energy consuming nation
drained heating oil stocks by 1.1 million barrels in the week
ended Jan. 8, the EIA reported.
But that was insufficient to trigger a drop for the whole
distillates category which groups heating oil with diesel and
jet fuel. Overall U.S. distillates stocks had dropped in the
previous four weeks.
Forecasts now show higher-than-normal temperatures in the
U.S. Northeast over the coming week, signalling heating fuel
demand will remain lower than normal.
U.S. distillates demand even failed to show a significant
pick-up from year-earlier levels over the past four weeks,
posting a drop of 4 percent.
However, unseasonably cold weather conditions across Europe
will hold heating demand "well above average" levels,
forecaster Telvent DTN said, adding that an unusual cold
pattern was set to prevail throughout Western Europe this week.
Gas oil futures <LGOG0> on the ICE exchange rose more than
$6 a tonne to surpass $642 on Thursday. Prices had tumbled to
below $631 a day earlier, their lowest intraday price since
Dec. 28.
Investors have looked to wider economic data in recent
months for signs of recovery and a potential rebound in energy
demand.
Two top Federal Reserve policy-makers said on Wednesday the
U.S. central bank will need to be certain the economic recovery
is firmly in place before tightening its monetary policy
stance.
The U.S. economy cut 85,000 jobs in December and the
unemployment rate stayed high at 10 percent, but one Fed
official expected jobs growth within a few months.
"We need to see a strong recovery of the economy in order
to surpass $85," Hasegawa said. "We will probably see the
market trading quietly and it will not be moved outside the
current range until after April."
(Editing by Ramthan Hussain)
