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Thu 23 Jul 2009 01:05 PM

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Oil holds above $65 as Europe equities rise

European markets rise for their 9th straight session; analysts measure a welcome drop in US crude stocks.

Oil held above $65 a barrel on Thursday, buoyed as European equity markets rose for their ninth straight session while analysts measured a welcome drop in US crude stocks.

US crude oil for September delivery rose 3 cents to $65.43 a barrel by 11.30am, UAE time, after earlier hitting a low of $65.04. London Brent crude edged up 12 cents to $67.33.

European shares rose for a ninth straight session on Thursday, with the FTSEurofirst 300 index rolling through its longest winning streak since late 2006.

Data from the Energy Information Administration showed a 1.8 million-barrel fall in U.S. crude stocks last week, less than the expected 2.1 million-barrel draw, but contrary to Tuesday's American Petroleum Institute report of a 3.1 million-barrel build.

"The EIA data looked pretty neutral, and there are some good structures in the markets to keep pushing it higher, but today the market seems to be trading more on euphoria from the stock markets," said trader Robert Montefusco at Sucden Financial.

"Dollar weakness is also helping the crude contracts to be a bit more constructive."

The dollar slipped on Thursday, edging close to a seven-week low versus the euro and a basket of currencies as early stock market gains suggested risk appetite was holding up despite a mixed bag of corporate earnings.

US gasoline stockpiles rose by 800,000 barrels, matching analysts' forecasts, and inventories of distillates, including heating oil and diesel, rose to a 25-year high.

The build came as demand for the fuels, which are linked to industrial activity, fell by 11 percent over the past four weeks against year-ago levels.

Likewise, Japan's June oil import volumes tumbled 19.1 percent from a year earlier to an 18-year low, government data showed on Thursday, as scheduled maintenance and weak demand reduced domestic refiners' need to ship in crude feedstocks.

The Labour Department will release first-time claims for jobless benefits for the week ended July 18 at 04.30pm, UAE time. Economists in a Reuters survey forecast a total of 550,000 new filings, compared with 522,000 in the prior week. (Reuters)

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