* U.S. crude stocks fall 1 mln barrels vs forecast +2.2 mln
* Gasoline stocks jump 2.9 mln barrels vs forecast +1 mln
* Equities dip on fears recovery expectations too high
(Updates throughout)
By David Sheppard
LONDON, Oct 7 (Reuters) - Oil edged higher above $71 a
barrel on Wednesday after the release of U.S. government figures
showed crude inventories in the world's largest energy consumer
fell last week, boosting the view demand is picking up.
The weekly report from the U.S. Energy Information
Administration (EIA), the statistical arm of the Department of
Energy, showed crude stocks falling by 1 million barrels,
against market expectations for a 2.2 million drop.
Gasoline stocks leapt by 2.9 million barrels, far more than
the 1 million barrels predicted by the market as refiners upped
production. Distillate stocks -- which include diesel and
heating oil -- rose by 700,000 barrels, more than double the
predicted 300,000 barrel build.
"The fuel inventories jumped a lot, and that's a bearish
factor, but one offset by the crude draw," Tradition Energy's
Gene McGillian said.
"Crude is pivoting around $70 a barrel with factors on
either side to hold it there. The key is going to be when demand
figures for gasoline and distillate pick up."
The EIA said product demand has recovered by 5 percent since
the same time last year, when it had been slashed by the onset
of the most severe stage of the financial crisis and the
hangover from crude's leap to almost $150 a barrel in July of
that year.
U.S. crude for November delivery <CLc1> rose 27 cents to
$71.15 a barrel by 1508 GMT, adding to Tuesday's gains of 47
cents. London Brent crude <LCOc1> rose 24 cents to $68.80.
Oil has rebounded from an 11-week low of around $66 in late
September back above the $70 level, but some analysts caution it
could slip back in the near term.
"Oil looks like it's on shakey ground as we approach the
U.S. third quarter (corporate) reporting season. A lot of near
term price gains have been won off a rebounding equity market,"
said Mark Pervan, a commodities analyst at the Australia & New
Zealand Bank.
After having jumped by around 40 percent in the second
quarter, oil prices have squeezed out a gain of only 1 percent
in the last quarter, trading in a band of between $65-$75.
A dip in European and U.S. equities weighed on oil on
Wednesday, but a strong stock market jump in Asia had seen
prices rise as high $71.76 a barrel.
While the global economy is healing from the financial
crisis, the recovery, along with energy demand, remains fragile.
Weakness in the dollar has supported commodities priced in
the greenback in recent days, as they become cheaper for holders
of other currencies. []
The dollar was slightly firmer on Wednesday, but gold
<XAU=> jumped to another fresh record high of $1,408.20 an
ounce.
(Additional reporting by Joshua Schneyer in New York and Fayen
Wong in Perth; Editing by William Hardy)
