Oil Report

UPDATE 10-Oil rises on falling product stocks, OPEC cut

* U.S. gasoline, distillates fall; crude stocks rise

* Fed keeps rates between zero and 0.25 pct

* OPEC chief sees supply curbs delivered by end-Jan

* Equities rally, weaker dollar lend support (Recasts, updates prices, market activity)

By Rebekah Kebede

NEW YORK, Jan 28 (Reuters) - Oil prices rose on Wednesday after U.S. government data showed draws in gasoline and distillate inventories and OPEC vowed to fully implement its steep supply cuts by the end of the month.

U.S. crude CLc1 settled at $42.16 a barrel, up 58 cents, after plunging 9 percent on Tuesday as bleak U.S. economic data stirred demand concerns.

London Brent LCOc1 settled at $44.90, up $1.17.

Oil prices climbed after data released by the U.S. Energy Information Administration showed a 1-million-barrel draw in distillate stocks last week as cold weather hit the U.S. Northeast, the world’s top heating oil market, and a surprise 100,000 barrel fall in gasoline supplies. [EIA/S]

“It looks like the products are kind of stabilizing the whole complex right now,” said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures, Inc in New York.

Crude stocks rose sharply, however, up 6.2 million barrels, as refiners facing weak fuel demand slowed operations.

“Another flood of crude. We are getting overwhelmed by crude,” said Phil Flynn, analyst at Alaron Trading in Chicago.

U.S. crude stocks have risen more than 44 million barrels in the past four months, the biggest four-month increase since 1990, according to EIA data, as refiners put oil in storage instead of into processing units.

Oil prices also recieved a boost from remarks by OPEC Secretary General Abdullah al-Badri at the World Economic Forum in Davos, Switzerland, that even an oil price of $50 a barrel was too low to encourage investment in new supply and added that the cartel would fully enforce supply curbs by the end of this month. [ID:nLS697011]

OPEC has agreed to shave some 4.2 million barrels per day of production since September to counter the free-fall in oil prices from record peaks over $147 in July.

Oil also found support as Wall Street rallied following the Federal Reserves announcement that it was prepared to buy longer-term Treasuries to improve credit market condition. [ID:nN28530953]

“There was a stock market rally on the FOMC statement, and crude futures rallied as well. The underlying hope is that with the FOMC’s stated goals, the economy would improve and with that demand for oil would improve as well. But everybody knows we are long way from that, and that realization spurred some late selling,” Andy Lebow, a broker at MF Global in New York said.

Traders had also been watching for the Federal Reserves decision on official borrowing costs, which the Fed held in a range of zero to 0.25 percent, as expected. [ID:nTRT000361] (Reporting by Rebekah Kebede and Richard Valdmanis in New York, Chua Baizhen in Singapore and Peg Mackey and Alex Lawler in London; Editing by Christian Wiessner)