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Oil jumps 12 pct on US inventory drop

OIL prices jumped more than 12 percent to near US$39 a barrel yesterday after US government data showed an unexpected fall in crude inventories last week due to lower imports.

The draw snapped a seven-week streak of crude builds in the world's top consumer, where the slumping economy has dragged down fuel demand.

US crude futures for March delivery, which expires on Friday, rose US$4.24 to US$38.86 a barrel by 14:31 p.m. EST (1931 GMT) after touching US$39.85 earlier. April delivery contracts traded up US$2.40 to US$39.81 a barrel.

London Brent for April delivery gained US$2.18 to US$41.73 a barrel.

"Crude stocks made a surprise fall here as imports weredown and refinery activity was up," said Amanda Kurzendoerfer, commodity analyst at Summit Energy. "We'll have to see if the import decline is the start of a trend as OPEC is really doing a lot to carry out output cuts."

The Organization of Petroleum Exporting Countries agreed to a series of deep output cuts in the second half of 2008 to counter the steep drop in oil prices from record highs over US$147 a barrel in July.

The drop in demand has helped push up US oil stocks by around 20 percent since September. The EIA data showed gasoline and distillate demand rising slightly over the four-week period ending Feb. 13, compared with year-ago levels.

The gains in oil prices came after a poor economic data hit the US stock market.

The number of US workers drawing unemployment aid jumped to a record high in early February, according to data on Thursday that highlighted the deterioration in the labor market as the 13-month recession deepened.

Japan and South Korea struggled to revive economies hit by collapsing exports, Russian unemployment soared and Britain's budget deficit reached a record high.


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