* EIA data to offer more clues on US oil demand recovery
* Fed statement to shed light on future tightening moves
* Colder weather f'casts in eastern US could support prices
By Jennifer Tan
SINGAPORE, Dec 16 (Reuters) - Oil hovered below $71 a
barrel on Wednesday, after snapping a nine-day losing streak a
day earlier, as data showing a deep drawdown in U.S. distillate
stockpiles outweighed a surprise rise in crude inventories.
Another set of oil inventory data from the U.S. Energy
Information Administration (EIA), due later in the day, could
offer more clues on the pace of demand recovery in the world's
top energy consumer.
The U.S. Federal Reserve's monetary policy decision will
also be closely eyed. Interest rates are seen staying unchanged
at near zero, but the tone of comments made could shed light on
when the Fed might start tightening policy, amid the spectre of
higher inflation.
Crude for January delivery <CLc1> rose 10 cents to $70.79 a
barrel by 0240 GMT, after settling up $1.18 at $70.69 on
Tuesday. London Brent crude <LCOc1> was up 16 cents at $72.21.
Oil prices rebounded on Tuesday from their longest slide
since 2001, after they had fallen more than 11 percent since
Dec. 1, amid persistent worries over high global inventories
and weak consumption.
"We think that the rebound in oil prices is sustainable, as
the factors that underpinned gains in the past few weeks will
remain in place -- that the global economic recovery is
underway," said David Moore, a commodity strategist with the
Commonwealth Bank of Australia.
"Markets will increasingly focus on the global recovery
story, and with OPEC likely to keep output targets unchanged at
its meeting next week, this will support oil prices further."
The pace of the U.S. economic recovery appears to be
gathering steam, after November producer prices jumped a
surprise 1.8 percent and industrial output rose firmly,
sparking inflation jitters in financial markets.
But any recovery in U.S. fuel demand remains patchy.
Distillate stocks, which include heating oil and diesel,
fell by 2.6 million barrels last week, eclipsing analysts'
projections of a 600,000-barrel drop, but crude supplies rose
by 924,000 barrels, countering forecasts of an 1.8
million-barrel decline, data from the American Petroleum
Institute (API) showed.
Gasoline inventories rose by 2.1 million barrels, topping
expectations of a 1.3 million-barrel build. []
A further drawdown in distillate stockpiles could be on the
cards, after a 10-day National Weather Service forecast earlier
this week called for lower-than-normal temperatures in most of
the eastern United States, the world's biggest regional
consumer of heating oil.
More economic data, due later, will also offer clues on the
U.S. recovery pace and the possible threat of inflation.
At 1330 GMT, the Labor Department will release the November
consumer price index. Economists expect a 0.4 percent rise
compared with a 0.3 percent increase in October.
On the supply side, the Organization of the Petroleum
Exporting Countries is expected to hold production targets
steady at its next meeting on Dec. 22.
The producer organisation on Tuesday said it sees the oil
market staying weak until the second half of next year, as a
rise in oil demand is countered by a huge volume of excess
supply. []
(Editing by Himani Sarkar)
