(Corrects fourth paragraph to show oil rose for two days in a
row)
* Large drawdown in US crude, distillate stocks buoys
prices
* Weekly jobless claims could confirm US recovery on track
* Colder weather f'casts in eastern US could support
prices
(Recasts with prices)
By Jennifer Tan
SINGAPORE, Dec 17 (Reuters) - Oil pulled back to near $72 a
barrel on Thursday, as the dollar's surge to a three-month high
against the euro outweighed a surprisingly large fall in U.S.
crude and distillate stockpiles.
The greenback marched broadly higher as investors unwound
short positions before the year-end, pulling crude back from
the one-week peak above $73 hit the previous day. []
Crude for January delivery <CLc1> fell 25 cents to $72.41 a
barrel by 0630 GMT, after hitting a high of $73.13 a barrel
earlier. It had settled up $1.97 a barrel at $72.66 on
Wednesday. London Brent crude <LCOc1> was down 13 cents at
$74.16.
Crude had risen for two days in a row following a
nine-session rout, in which prices plummeted 11.3 percent from
levels above $78 a barrel. Analysts attributed the fall to
persistently poor fuel demand and bloated U.S. oil inventories.
A report from the U.S. Energy Information Administration on
Wednesday showed crude inventories declined by 3.7 million
barrels last week, eclipsing analyst forecasts for a more
modest draw of 1.8 million barrels.
A 2.9-million-barrel draw in U.S. distillate stocks, which
include heating oil and diesel, was almost five times bigger
than the 600,000-barrel dip analysts expected, while gasoline
stocks grew less than expected. []
"Inventory was the single issue that was dragging down the
market -- there's no question about it," said Tony Nunan, risk
manager with Tokyo-based Mitsubishi Corp.
"The economy may not be falling any more, but we're not out
of the woods yet -- we still have a lot of inventory and fuel
demand remains anaemic. We're going to see this pattern of
volatility in prices, with swings determined by inventory
levels."
A further drawdown in distillate stockpiles could be on the
cards, after a 10-day National Weather Service forecast earlier
this week called for lower-than-normal temperatures in most of
the eastern United States, the world's biggest regional
consumer of heating oil.
Economic data unveiled this week appears to have placed the
United States on track for a gradual recovery. Weekly jobless
claims, due later, are expected to confirm a brightening
outlook for the world's largest economy.
Economists forecast a total of 465,000 new filings for
jobless benefits for the week ended Dec. 12, down from 474,000
in the prior week.
The U.S. Federal Reserve opted on Wednesday to hold
interest rates near zero amid "subdued" inflation risks, and
said rates should remain exceptionally low for an extended time
to help spur an economic recovery. []
On the supply front, the Organization of the Petroleum
Exporting Countries, whose daily production meets around a
third of global crude demand, will convene in Angola to discuss
output policy on Dec. 22.
Few expect OPEC to scale back the 4.2 million barrels a day
output cuts the group has agreed upon since last year. Most
members are comfortable with the current range of oil prices.
(Editing by Michael Urquhart)
