* Unexpected large draw in U.S. crude stocks lifts prices
* U.S. heating oil, gasoline rally supports oil's advance
* China Oct crude imports fall, pressures oil early
* Coming Up: OPEC monthly Oil Market Report, Thursday
(Updates with settlement prices and market activity)
By Gene Ramos
NEW YORK, Nov 10 (Reuters) - Oil prices soared to the
highest level in 25 months on Wednesday, rising for the seventh
time in eight sessions as U.S. government data showed an
unexpected heavy drawdown in crude inventories last week.
The day's price surge broke oil's recent strong inverse
correlation with the dollar, which rose to a one-month high
against the euro.
Oil traded higher after data from the U.S. Energy
Information Administration showed a 3.3 million-barrel drawdown
last week, compared with forecasts for a 1.4 million-barrel
build for the week to Nov. 5. [] Crude prices found some
support late Tuesday after the American Petroleum Institute
reported a drawdown for the week. []
U.S. crude for December delivery <CLc1> settled $1.09
higher at $87.81 a barrel, the highest close since Oct. 8,
2008. In the eight-day stretch, U.S. crude has gained $6.38, or
7.8 percent.
Trading volume was heavy at 830,00 lots, 20 percent above
the 30-day average, according to preliminary Thomson Reuters
data.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of possible technical price support lines:
http://link.reuters.com/meg74q
Graphic of IEA's oil price assumptions:
http://r.reuters.com/hyn54q
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Prices bounced off a session low of $86.10, shaking off
both the stronger dollar and weak Chinese import data.
Gasoline and heating oil led gains in the complex after a
deeper-than-expected decline in inventories thanks to stronger
demand, partly stoked by distillate exports to Europe, even
though refiners stepped up production.
ICE December Brent crude <LCOc1> ended up 63 cents, at
$88.96, the highest close since Oct. 3, 2008. Brent crude has
also gained in seven of the last eight sessions, advancing
$5.81, or 7 percent, in that span.
"Today's EIA data was bullish across the board as crude,
gasoline and distillate stocks yielded decent draws,
significantly more than expectations. In addition, an uptick in
refinery utilization was not enough to offset strong demand for
gasoline and distillates," said Chris Jarvis, senior analyst,
Caprock Risk Management in New Hampshire.
"Overall the market will likely view this as bullish, which
underpins strong secular trends on the macro level coupled with
concerns over a weak dollar, reinforcing the bullish sentiment
for the energy complex."
In addition to market fundamentals, oil prices have broken
out of this year's $70 to $85 range, supported by the Federal
Reserve's massive Treasury bond buying plan to speed economic
growth. In addition, some members of the producer group OPEC
have said they will support a higher price range.
Wednesday's data showing an unexpected fall in U.S.
jobless claim benefits added some relief to the still-weak
labor market. [] Last week, a report showing that
more jobs were created in October than expected helped lift oil
prices.
CUSHING, FUEL STOCKS DOWN
Crude stocks at the Cushing, Oklahoma, delivery hub for oil
traded on the New York Mercantile Exchange, fell to the lowest
level since April as imports dropped and refinery utilization
rose.
Distillate stockpiles, which include heating oil and diesel
fuel, fell 5.0 million barrels and distillate demand over the
past four weeks jumped 16 percent from the same period a year
ago.
The strong rise in distillate demand was in part due to
increased exports following the strike in France, which cut
supplies from the nation's 12 refineries, analysts said. U.S.
exports of products are partially reflected in the EIA's demand
figures.
"The magnitude of the product supply draws, especially the
drop in distillates, was difficult to ignore even allowing for
a one-off pop in exports toward Europe," said Jim Ritterbusch,
president of Ritterbusch & Associates in Galena, Illinois.
U.S. December heating oil <HOZ0> ended up 3.52 cents at
$2.4419 a gallon, a two-year high. Heating oil has advanced
eight straight sessions, gaining 22.18 cents, or 10 percent.
The heating oil crack spread <CL-HO1=R>, the premium over
crude after processing, ended at $14.75 a barrel, the highest
since Oct. 1, and extending a rally to six consecutive days.
U.S. December gasoline <RBZ0> ended up 3.14 cents at
$2.2179 a gallon, a six-month high on support from EIA
reporting gasoline supplies fell 1.9 million barrels against
the forecast for an 800,000-barrel drop.
Earlier on Wednesday, oil prices came under pressure as
crude imports to China, the world's second-largest oil user,
fell 30 percent in October from record purchases in September.
However, the average of the two months was in line with China's
20 percent increase in imports so far this year.
[]
(Additional reporting by Robert Gibbons and Eileen Moustakis
in New York; Christopher Johnson and Ikuko Kurahone in London;
Alejandro Barbajosa in Singapore; Editing by Lisa Shumaker)
