Oil holds above $72 after big US crude drawdown

       Oil prices held above $72 yesterday in Asia after jumping the previous day on an unexpected fall in US crude inventories.
       Benchmar k crude for September delivery was down 9 cents to $72.33 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange.
       On Wednesday, the contract jumped $3.23 to settle at $72.42 after the Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
       Analysts expected the EIA numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
       The drawdown of crude supplies suggests demand may be improving as the US economy recovers from a severe recession.
       ' The outlook for the US economy looks pretty strong," Christoffer MoltkeLeth, head of sales trading at Saxo Capital Markets in Singapore. 'We expect a recovery in the second half, and that helps crude."
       Oil prices will likely test $75 a barrel soon, Moltke-Leth said.
       'A moderate recovery is more or less discounted at this price level,' he said."We would have to see signs that it's a Vshaped recovery to be able to take prices a step higher."
       In other Nymex trading, gasoline for September delivery was steady at $2.04 a gallon and heating oil held at $1.92.Natural gas for September deliver y added 1.9 cents to $3.14 per 1,000 cubic feet.
       In London, Brent prices fell 43 cents to $74.16 a barrel on the ICE Futures exchange.
       Despite New York crude turning higher in afternoon trade, analysts said market sentiment re mains weighed down by weak US energy demand.
       Data released by the US Department of Energy (DoE) Wednesday showed distillate stocks at 27-year highs.
       "There's these huge overhangs with middle distillates... Distillate stocks are still extremely bloated," said Jason Feer,Asia Pacific general manager of energy market analysts Argus Media in Singapore.
       Distillates, which include diesel and heating fuel, fell 700,000 barrels last week whereas analysts had pencilled in a gain of 500,000 barrels, but Feer said volumes were 'still 15% to 20% above last year."
       He added that high levels of distillate stocks indicated "economic growth is still quite sluggish."
       However, there was a decline in crude inventories, which fell by a massive 8.4 million barrels last week, snapping a three-week run of gains.
       The market had expected an increase of 1.5 million barrels.