* Weak after 6 days of losses, some support from weak
dollar
* EIA data show surprise large build in distillates stocks
* Further pressure from Saudi supply boost to Asia
(Updates prices)
By Ramthan Hussain
SINGAPORE, Dec 10 (Reuters) - Oil held steady below $71 on
Thursday, after sliding more than 2 percent to a two-month low
a day earlier on a hefty increase in U.S. fuel stockpiles, as
the weak dollar offered some support.
Traders are also watching the bearish impact of Saudi
Arabia's move to restore full term crude supply to two Asian
buyers, ahead of OPEC's Dec. 22 meeting, at which most members
have said they would not raise production targets.
U.S. crude for January delivery <CLc1> rose 8 cents to
$70.75 a barrel by 0643 GMT, after losing almost $2 for its
sixth straight day of losses on Wednesday, when it hit the
lowest since early October at $70.13.
London Brent crude <LCOc1> gained 20 cents to $72.59.
"A lot of investors are getting out of the high-liquidity
markets like gold and crude," said Ken Hasegawa, a commodity
derivatives sales manager at broker Newedge in Tokyo.
"It's tough for crude to go higher this month because
everyone is moving to close their positions by the end of the
month. But early next year, money will be coming back to the
exchanges and commodities will rise gradually.
U.S. Energy Information Administration (EIA) data showed
that distillate stocks, which include heating oil and diesel,
rose last week by an unexpected 1.6 million barrels, versus
forecasts for a 600,000-barrel drop, reflecting persistently
poor demand in the world's largest oil consumer during winter.
[]
Gasoline inventories rose 2.2 million barrels, above
projections of a 1.5 million-barrel build.
The 3.8-million-barrel drawdown in crude stockpiles as
refiners raised production was shrugged off as the government
figures lagged the 5.8-million-barrel drop shown in separate
industry data on Tuesday.
SUPPLIES ABUNDANT
"Stock levels at Cushing have been rising. That is a
bearish factor," Hasegawa added.
The EIA said crude stocks at Cushing, Oklahoma, the
delivery point for NYMEX crude oil futures, were up last week
by 2.5 million barrels at 33.4 million barrels.
"While we are still shy of the near 35 million-barrel peak
in February this year, the pressure on spreads remains and the
contango in the WTI forward curve can stand to widen," BNP
Paribas said in a report.
Even as Ecuador and Kuwait echoed remarks by OPEC peers
that the cartel would not raise output at its Angola meeting,
Saudi Arabia boosted supplies for January to at least two
buyers in Asia after cuts of 5-7 percent for December, and kept
full volumes to six others. []
The world's top oil exporter last month had allocated full
contracted volumes for the first time in a year for December to
many Asian customers and raised supply to oil firms with global
systems by 5-10 percent from November.
Oil had rallied to a high for the year of $82 in October,
from below $33 last December and prices inched up on Thursday
largely due to the weaker U.S. currency.
The U.S. dollar retreated after this week's recovery, with
the New Zealand <NZD=D4> and Australian dollars <NZD=D4>
leading demand for higher-yielding and commodities-linked
currencies after much stronger than expected Australian jobs
data.
The dollar <.DXY> <=USD> was steady against a currency
basket in later trade.
The weaker greenback makes dollar-denominated commodities
cheaper for holders of other units, and also lifted gold above
$1,130 an ounce on Thursday after hitting its lowest in more
than three weeks the previous day. []
For a graphic showing the oil and dollar, click:
http://graphics.thomsonreuters.com/129/CMD_OIL$CR1209.gif
(Editing by Clarence Fernandez)
