* U.S. crude stocks up, but distillates, gasoline down -API
* Firmer dollar adds pressure to oil
* Cold weather, strong U.S. consumer confidence offer
support
By Judy Hua
SINGAPORE, Dec 30 (Reuters) - Oil held steady below $79 on
Wednesday, as bearish industry data showing a surprise rise in
U.S. crude inventories and the firm dollar, were balanced by
falls in fuel stocks due to higher heating demand during
winter.
Crude inventories in the world's biggest oil consumer rose
by 1.7 million barrels last week, against expectations of a 2.0
million-barrel drawdown, American Petroleum Institute (API)
data showed. []
U.S. crude for February delivery <CLc1> fell 10 cents to
$78.77 a barrel by 0357 GMT in thin pre-holiday trade, after
settling 10 cents up on Tuesday. London Brent crude for
February <LCOc1> was unchanged at $77.64.
Oil prices have rallied 13 percent over the past two weeks
and have gained more than $32 so far this year, or 70 percent.
"In anticipation of this week's API and EIA data, investors
were expecting some pretty substantial drawdowns, not just in
oil products but also in crude as refiners increased their
operations," said Ben Westmore, commodities economist at
National Australia Bank.
"A very rosy outlook had been pictured in the expectations
for a crude drawdown rather than an increase in crude stocks,
and so you had this moderation in the oil price."
Still, the rise in the industry figures paled in contrast
to the declines in crude stocks of 4.9 million barrels in the
week before last, data from the government Energy Information
Agency (EIA) showed. This followed slides of more than 3
million barrels in the previous two government reports.
Gasoline inventories fell by an unexpected 1.4 million
barrels, the API data showed, after analysts polled by Reuters
forecast a 500,000-barrel build. []
Distillate fuel stocks fell by 3.5 million barrels as cold
weather hit the U.S. Northeast, the world's biggest heating oil
market. Heating oil stockpiles dropped by 2.6 million barrels.
EIA's weekly inventory data are due out at 10:30 am EST
(1530 GMT) on Wednesday.
"API data is generally just a lead to the EIA. That's the
one that really causes the market to move," Westmore said. "We
really need further drawdown of products and distillates stocks
in order to see oil price move higher."
STRONG DOLLAR DAMPS OIL
Oil was also dampened by the strong dollar, which posted
gains against most major currencies on Tuesday, and climbed to
a two-month peak versus the yen, boosted by a report showing a
rise in U.S. consumer confidence this month. []
Oil has often eased this year when the dollar firms, making
crude more costly for holders of other currencies.
But the cold weather in the United States continued to
offer support to oil prices, with temperatures in the Northeast
seen average below normal on Wednesday and near to above normal
on Thursday and Friday. []
Further lift 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. []
Oil markets have looked to the wider economy this year for
signs of strength that could boost flagging fuel demand.
Worries about the economy have at times prompted investors to
pull cash from commodities. []
(Editing by Ramthan Hussain)
