UPDATE 7-Oil rises slightly on US cold weather, inventories

                                
 * U.S. consumer confidence hits 3-month high in December
                                
 * Further draws seen in U.S. crude inventories
                                
 * Below average cold weather expected in near term in U.S.
                                
 * Dollar rises against the euro, yen
 (Updates with settlement price, recasts)
                                
 By Matthew Robinson
                                
 NEW YORK, Dec 29 (Reuters) - Oil prices rose slightly on
Tuesday on cold U.S. weather and expectations weekly data would
show another fall in U.S. inventories.
                                
 U.S. crude for February delivery <CLc1> rose 10 cents to
$78.87 a barrel. In London, Brent crude for February <LCOc1>
traded up 32 cents to settle at $77.64 a barrel.
                                
 U.S. heating oil futures led the oil complex higher, as   
cold weather hit the U.S. Northeast, the world's largest
heating oil market. Temperatures were expected to average below
normal in the region through Friday. [ID:nDTN700]
                                
 "Cold weather and expectations for additional draws in
crude and distillate stocks supported, while the stronger
dollar and weak gasoline demand acted as a drag," said Tom
Bentz, analyst at BNP Paribas Commodity Futures Inc in New
York.
                                
 An updated Reuters poll of analysts forecast weekly data
will show U.S. crude inventories fell by 2 million barrels last
week as refiners continued to draw down stocks for year-end tax
reasons. Distillate stocks, including heating oil, were seen
down by 2.2 million barrels on cold weather. [EIA/S]
                                
 Weekly U.S. inventory data from the American Petroleum
Institute was due at 4:30 p.m. EST (2130 GMT) on Tuesday, while
data from the U.S. Energy Information Administration will be
released on Wednesday.
                                
 Weekly U.S. gasoline demand data from MasterCard
SpendingPulse showed consumption down 3.3 percent in the week
to Dec. 25, compared with the previous week, but up 1.3 percent
against the previous year. [ID:nNYS007658]
                                
 Further support came after data showed U.S. consumer
confidence improved more than expected in December, hitting a
three-month high as job market pessimism eased and consumers'
expectations reached a two-year high. [ID:nN29186364]
                                
 Oil markets have looked to the wider economy this year for
signs of strength that could bolster flagging fuel demand.
Worries about the economy have at times prompted investors to
pull cash from commodities. [ID:nN29111410]
                                
 The U.S. dollar climbed against the euro and yen as the
economy continued to show signs of improvement. [.N]
                                
 U.S. home prices were unchanged in October, according to
the Standard & Poor's/Case-Shiller indexes, indicating
stabilization in the housing sector, though the figures dashed
hopes for a sixth-straight monthly increase. [ID:nN29158512]
                                
 Crude rose on Monday, boosted by colder U.S. weather and
tensions between Russian and Ukraine that raised concerns about
oil supplies to Europe.
                                
 However, Ukrainian state energy firm Naftogaz said on
Tuesday that Russia had agreed to a 30 percent increase in the
transit tariff for the oil it transports to Europe in a deal
that calmed fears of supply cuts. [ID:nLDE5BS0N2]
 (Additional reporting by Robert Gibbons in New York,
Christopher Baldwin in London and Judy Hua in Singapore;
Editing by Christian Wiessner)