* U.S. crude rallies after almost 6 pct drop on Wednesday
* Euro zone economic sentiment hits 8-month high in July
* China central bank says to keep loose monetary policy
(Updates prices)
By Christopher Johnson
LONDON, July 30 (Reuters) - Oil rose above $64 a barrel on
Thursday, boosted by stock markets in Europe and Asia, better
than expected corporate results and data suggesting the economic
downturn was bottoming out.
The rally followed a drop of almost 6 percent on Wednesday
in the wake of U.S. data showing a big jump in crude inventories
and on concerns over the outlook for Chinese economic growth
following a fall in its stock markets.
U.S. light crude oil futures <CLc1> rose $1.09 to a high of
$64.44 per barrel before easing back to $64.21 by 1126 GMT,
after dropping 5.8 percent on Wednesday, the biggest daily
percentage fall since April 20.
London Brent <LCOc1> jumped even more strongly, rising to a
high of $68.08, up $1.55 per barrel.
Stock markets rallied in Europe and Asia on Thursday,
supported by positive economic data and good corporate results.
[] []
In Europe, BT <BT.L> and France Telecom <FTE.PA> both posted
better than expected results, while in Asia, the Nikkei average
hit its highest close in nine months on Thursday, lifted by
Honda Motor <7267.T> and Nissan Motor <7201.T> profits.
Euro zone economic sentiment increased in July to its
highest level in eight months, data showed on Thursday, a sign
that recession in Europe is easing. []
"Stock markets are higher this morning and we had a big
sell-off, maybe too big a sell-off, on crude yesterday," said
Christopher Bellew, oil broker at Bache Commodities in London.
"Certainly we can live with crude between $60 and $70 per
barrel and we have come down towards the bottom end of that
range this week," he added.
EIA
Oil fell sharply on Wednesday after the Energy Information
Administration (EIA) said crude stocks in the world's top energy
consumer rose an unexpected 5.1 million barrels to 347.8 million
while refineries scaled back faster than anticipated. []
Distillate stocks rose to the highest level in nearly 25
years, while gasoline stockpiles fell, the EIA said.
Over the past four weeks, U.S. fuel consumption has dropped
4.1 percent from year-ago levels, led by a 10.7 percent decline
in demand for distillates.
Inventories at Cushing, Oklahoma, a large storage hub and
delivery point for U.S. crude futures, are now close to operable
capacity, industry sources say.
A glut at Cushing earlier this year prompted U.S. crude
futures to trade at exceptional discounts to Europe's Brent
crude. U.S. light crude oil for September delivery was
discounted by more than $3.60 a barrel to Brent on Thursday.
Traders said they were also watching for any measures by
China that could impact industrial growth and fuel demand.
Chinese shares suffered their deepest daily decline in eight
months on Wednesday on fears that Beijing might move to tighten
money supply and banks could begin to restrict lending. []
China's central bank said on Thursday it would keep a loose
monetary policy to consolidate its recovery. []
Adding to uncertainty in the oil market was news the U.S.
Commodities Futures Trading Commission was considering
implementing position limits for some commodity futures after
wide price swings that have raised concern over speculation.
Some traders have said they are worried U.S. regulators may
impose limits on futures positions, which could push investors
away from exchange-based oil trading in contracts such as NYMEX
U.S. light crude oil.
(Editing by Anthony Barker)
