UPDATE 4-Oil rises above $74 on equities, U.S. stock draw

                                
   * U.S. crude stocks fell more than expected last week-API
                                
 * Coming Up: EIA inventory report; 1500 GMT
                                
 * For a technical view, click: [ID:nSGE652009]
 (Adds background on Cushing stocks, updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, June 3 (Reuters) - Oil advanced for a second day
on Thursday to top $74 as robust U.S. economic indicators
re-injected some confidence into financial markets and
signalled oil inventories in the world's top consumer may
shrink.
                                
 Optimism from surprisingly strong U.S. housing data and
double-digit auto sales growth extended into Thursday, sending
the Nikkei up over 3 percent. [MKTS/GLOB]
                                
 Also aiding crude was a weaker dollar, which dropped by
more than a third of a percent against a basket of currencies
<.DXY>.
                                
 Prices of U.S. crude for July delivery <CLc1> rose $1.47 to
$74.33 a barrel by 0646 GMT, still down almost 15 percent from
an early-May 19-month high above $87. ICE Brent crude <LCOc1>
climbed $1.30 cents to $75.05.
                                
 "We've seen oil prices taking their cues to a large degree
from equity market movements," said Toby Hassall, chief
commodities analyst at CWA Global Markets Pty Ltd.
                                
 For a correlation graphic of oil, equities and the euro:
http://graphics.thomsonreuters.com/gfx/AB_20100306145731.jpg
                                
 "If this spike in risk aversion is reversing, you might
expect the U.S. dollar to give up some recent gains. That
improvement in risk appetite might feed into oil prices, and
the typical seasonal decline in stockpiles in the U.S. would
also be supportive."
                                
 U.S. crude stockpiles fell a larger-than-expected 1.4
million barrels last week, an industry group said on Wednesday.
Oil traders awaited confirmation of the decline from government
statistics due later on Thursday. [EIA/S]
                                
 U.S. gasoline supplies fell 962,000 barrels last week,
according to Wednesday's American Petroleum Institute report,
compared with forecasts for a 500,000 barrel drop, while
distillates rose 852,000 barrels, above expectations for a
100,000-barrel gain.
                                
 VOLATILE WEEK
                                
 Concern of a slowdown in the Chinese economy weighed on oil
prices earlier this week, adding to soured sentiment because of
Europe's debt crisis.
                                
 But U.S. pending home sales in April rose more than
expected to a six-month high, the third consecutive month of
gains, fueling optimism that an economic recovery is gaining
steam in the world's top economy. [ID:nN02163984]
                                
 Oil prices have traded in a range between $71.64 and $75.33
this week, torn by evidence that the world's biggest
oil-consuming nations are posting steady demand growth and
speculation that consumption will be hurt by a stagnant
European economy.
                                
 "There is still uncertainty throughout the global economy,"
Hassall said. "I expect volatility to remain elevated in the
near term. Europe has structural problems that have yet to be
solved."
 (Additional reporting by James Topham in TOKYO; Editing by
Michael Urquhart)