Oil held steady above $74 on Wednesday, buoyed by industry data showing a sharp drawdown in US crude stocks and an unexpected fall in gasoline supply, but the firm dollar limited gains. 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.
US crude for February edged up 6 cents to $74.46 a barrel by 0713 GMT in thin pre-holiday trade, after rising 68 cents on Tuesday. Prices have gained almost $6 since hitting a more than two-month low of $68.59 on December 13. London Brent crude for February rose 2 cents to $73.48.
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 US Northeast, the biggest heating oil market in the world. Total US heating oil inventories fell by 993,000 barrels. The US Energy Information Administration's (EIA) weekly report is due at 10:30 am EST (1530 GMT) on Wednesday.
OPTIMISM ON ECONOMY Oil's recovery was curbed by the strengthening dollar, which hit a two-month high versus the yen on positive US economic news and the steepest yield curve on record. The dollar also held firm against a currency basket.
Oil prices have often retreated this year when the dollar firms, making crude more costly for holders of other currencies. A stronger dollar can also signal investors putting funds into safe havens and away from assets deemed more risky, including commodities.
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