Oil Gains $1 on Surprise Inventory Declines

Crude futures rose more than a dollar on Wednesday, lifted by government data showing an unexpected crude inventory drop, down 4.8 million barrels last week, on top of expected draw downs in refined products stocks last week.

U.S. crude snapped a two-day down streak with a gain $1.13 or 1.9% to settle at $61.82. Earlier in the session, it traded as high as $62.10 a barrel. Year-to date, oil is still down 0.6%.

London Brent crude climbed slightly more.

U.S. crude stockpiles fell 4.8 million barrels last week after persistent fog along the key Gulf Coast refining and transit hub disrupted imports, data from the Energy Information Administration showed. Analysts had forecast a 2 million barrel rise in stocks.

"The data definitely comes out supportive, with a larger-than-expected draw on gasoline and the draw in crude when we were expecting a build," said Eric Wittenauer at A.G. Edwards.

Gasoline inventories fell 3.8 million barrels last week, while distillates declined 1.3 million barrels, the EIA said.

Oil has held near $60 a barrel despite the sell-offs in some equity markets over the last week. U.S. crude is more than $10 up on mid-January levels and treble the level from the start of 2002.

"The main thing has been the increase in market volatility in the last few days -- equities, bonds and commodities," said Jim Stride, Managing Director of AXA Investment Managers UK.

"But we see reasonably stable dynamics in the oil market." U.S. Treasury Secretary Henry Paulson on Wednesday predicted stable growth for the economy of the world's biggest oil consumer and the government said its fuel consumption would remain strong.

Traders were also keeping a wary eye on OPEC member Iran's standoff with the West over its nuclear program. Major powers working on a U.N. resolution to impose new sanctions on Iran probably will not complete a draft text by the end of the week as expected, diplomats said after another round of talks on Tuesday.

The boost also helped energy stocks. The S&P Energy index was up 1.5% after the report.

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