* U.S. crude, distillates, gasoline stocks fall
* Dollar strength caps gains on oil, commodities
* Strong U.S. home sales data rallies sentiment
(Updates prices, adds comment)
By Chris Baldwin
LONDON, Dec 23 (Reuters) - Oil traded above $74 on
Wednesday, buoyed by a sharp drawdown in U.S. crude stocks and
an unexpected fall in gasoline inventories, but held in check by
a firmer dollar.
U.S. crude for February <CLc1> rose 30 cents to $74.70 a
barrel by 1033 GMT in thin pre-holiday trade, after rising 68
cents on Tuesday. Prices have gained almost $6 since Dec. 13.
London Brent crude for February <LCOc1> rose 23 cents to
$73.69.
Crude inventories in the world's biggest oil consumer fell
3.7 million barrels last week against analysts' expectations of
a 900,000-barrel drop, the American Petroleum Institute (API)
said on Tuesday. [] []
The U.S. Energy Information Administration's (EIA) weekly
report is due at 10:30 a.m. EST (1530 GMT) on Wednesday.
Gasoline inventories fell 1.1 million barrels as imports
also slipped, API data showed, after a Reuters poll forecast a
1.2 million-barrel build. []
Inventories of distillate fuels fell by just 745,000
barrels, against forecasts for a 1.9 million-barrel drop,
despite cold weather in the U.S. Northeast, the biggest heating
oil market in the world. Total U.S. heating oil inventories fell
by 993,000 barrels. []
OPEC COMPLIANCE
On Tuesday as per expectations, the Organization of the
Petroleum Exporting Countries (OPEC) left its output policy
unchanged, despite concerns over the organisation's ability to
get producers to comply with quotas. []
[]
"The OPEC news yesterday is still having a nice, slight
effect today. Without realizing it, we are having a centre-rally
(mid-range) as crude stays rangebound," said market analyst
James Hughes at CME Markets.
"With equity volumes so low because of the holidays, crude
prices are going to drive the rest of the markets. I wouldn't be
surprised if we close above $75 before the New Year."
ECONOMY OPTIMISM
Oil's recovery was curbed by a strengthening dollar, which
touched a two-month high versus the yen on positive U.S.
economic news and the steepest Treasury yield curve on record.
[]
The dollar also held firm against a currency basket. <.DXY>
Oil prices have often retreated this year when the dollar
firms, making crude more costly for holders of other currencies.
Further optimism about an economic recovery was reflected by
surprisingly strong sales of previously owned U.S. homes, which
boosted Western stock markets, and Asian equities followed suit.
Data on Tuesday showed U.S. existing home sales jumped 7.4
percent in November to an annual rate of 6.54 million units, the
fastest pace since February 2007. []
(Additional reporting by Judy Hua in Singapore, editing by
Keiron Henderson)
