* EIA reports product stocks fall, small crude rise
* U.S. dollar weakens against basket of currencies
* U.S. equities rise on bank performances
(Updates prices at settlement)
By Edward McAllister
NEW YORK, Oct 21 (Reuters) - Oil jumped nearly 3 percent to
settle above $81 a barrel on Wednesday, its highest close in
over a year, due to bullish U.S. crude inventory data and a
rise in U.S. equities that showed optimism about the economy.
U.S. crude for December <CLc1> rose $2.25 to settle at
$81.37 a barrel, the highest since Oct. 9, 2008. Brent crude
<LCOc1> added $2.45 to settle at $79.69.
Weekly data from the Energy Information Administration
revealed a larger-than-expected 2.3-million-barrel draw in
gasoline stocks in the world's largest energy consumer last
week, while crude inventories rose 1.3 million barrels, less
than the expected 1.8 million-barrel rise. []
"The gasoline draw was bullish, and the same for
distillates, with refinery rates nearly unchanged," said Mike
Zarembski, senior commodities analyst for OptionsXpress in
Chicago.
Traders also had their eyes on the weakness of the dollar
and stronger equities as price drivers.
"As long as the dollar is down and stocks are up, traders
want to buy energies," Zarembski added.
Wall Street gained on Wednesday as results from banks,
including Morgan Stanley, topped expectations and on increased
optimism about the technology sector's profit outlook. []
The dollar sank against a basket of other currencies as
expectations that U.S. interest rates will remain very low
weighed on the greenback. The euro rose above $1.50 for the
first time since August 2008. []
A falling dollar makes oil relatively cheap to holders of
other currencies.
The weak dollar and anticipation of future economic
recovery have been the main drivers of the oil price rally for
the past few months.
U.S. crude has risen around 120 percent from the Dec. 31
2008 low of $36.94 to the current session high on Wednesday to
above $81.
China's State Council voiced confidence that China's
economy has recovered from the global financial crisis,
performing better than expected in the first nine months of the
year. []
The International Energy Agency, which represents 28
industrialized countries, has warned that the fast rise in
prices could pose a risk to global economic recovery.
[]
But Nigeria's oil minister, Rilwanu Lukman, said $80 was a
fair price for oil and one that should encourage investment in
new supplies. []
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Alex Lawler in London, Nick Trevethan in Singapore;
Editing by Marguerita Choy)
