Oil edged above $71 a barrel on Wednesday after data showed U.S. crude stockpiles fell more than expected last week, but higher inventories of gasoline and winter fuel capped gains.

NYMEX crude was 15 cents higher at $71.08 a barrel by 1520 GMT, after settling up $2.07 on Tuesday, while ICE Brent was 9 cents lower at $69.77.

Figures from U.S. government's Energy Information Agency showed crude stocks fell by 4.7 million barrels in the week ended September 11, nearly twice as much as analysts' forecasts for a 2.4 million barrel drop, but stocks of refined products were higher.

Traders are having a hard time digesting the figures and this has tempered the earlier bullish enthusiasm for crude futures, said analyst Phil Flynn at PFGBest research in Chicago.

Traders are instead focusing on refined product futures...traders are particularly zeroing in on distillates because the increases have added to already ample supplies so far ahead of winter.

The weakness of oil futures on Wednesday was in contrast to other commodities and equities, which rose strongly, inspired by comment from the U.S. Federal Reserve Chairman Ben Bernanke recovery was gaining momentum.

The FTSEurofirst 300 index of top European shares cracked the 1,000 mark for the first time since October 2008. and gold hit 18-month highs.


Although supply and demand fundamentals played big roles on Wednesday, many say a return of risk appetite is the real reason for recovery from a market low of $32.40 in December -- the weakest in nearly five years -- to the August year-high of $75.

As all markets have looked to economic data suggesting the worst of economic recession is over, oil has spent much of the year moving in tandem with gains on equity markets and with other commodities.

It has also been inversely correlated to the dollar, which on Wednesday hit a one-year low against a basket of currencies, as investors, no longer as nervous about potential losses, turned to riskier assets.

A weaker dollar can also fuel purchases of oil and other dollar-denominated commodities, as they become relatively less expensive to non-dollar holding investors.

OPEC officials last week said high inventories were largely irrelevant to the oil price and they agreed to keep official output curbs unchanged.

But an OPEC delegate wrote in a Kuwaiti newspaper on Wednesday that the Organization of the Petroleum Exporting Countries still might need to cut its oil supply next year to match an expected fall in demand for the group's crude next year.

(Additional reporting by Barbara Lewis and David Sheppard in London; Editing by Barbara Lewis)