Oil was steady under $43 a barrel on Thursday, after surging more than 6 percent overnight on U.S. government data that showed a larger-than-expected drop in gasoline stocks as demand rose on cheaper prices.

To gauge the demand outlook in the world's top oil consumer, the market will eye U.S. January durable goods orders and weekly jobless claims, due later on Thursday and likely to reflect slumping business investment and rising unemployment.

On supply, Abu Dhabi National Oil Co's (ADNOC) deepened crude cuts to Asia in April, taking traders by surprise and possibly signaling that OPEC will agree to cut output further at its next meeting in March.

U.S. crude for April delivery was up 41 cents to $42.91 a barrel by 0820 GMT (5:20 a.m. EST), after rising over 1 percent to an afternoon high of $43, and surging $2.54 on Wednesday.

London Brent crude gained 46 cents to $44.75.

Oil's overnight gains were spurred by U.S. Energy Information Administration data showing gasoline stocks fell 3.4 million barrels in the week to February 20, against a forecast for just a 100,000-barrel draw.

Inventories in the U.S. have gone down for two weeks in a row -- it looks like the worst is probably over as far as the U.S. is concerned, but it's really the economy, the economy, the economy, said Anthony Nunan, risk management executive at Tokyo-based Mitsubishi Corp.

The data also showed a 1.7 percent rise in U.S. gasoline demand over the four weeks ending February 20, as low gasoline prices lured U.S. motorists back on the roads.

This helped oil shrug off a drop in equities markets, with European shares hitting a new six-year low.

U.S. stocks also fell, after U.S. President Barack Obama's first address to Congress shed little new light on how he plans to stabilize the economy and shore up banks.

Data showing that sales of previously owned U.S. homes plunged in January and prices hit a six-year low also weighed on shares.

Reports earlier this week showed high compliance by OPEC members on deep production cuts agreed last year to stem the slide in oil, and Abu Dhabi's move may pre-empt a decision to cut more when the cartel meets in March.

Venezuelan Finance Minister Ali Rodriguez, a former president of OPEC, said the OPEC nation expected to propose new output cuts.

Global energy consumption has collapsed as the financial crisis has thrown most major economies into a recession, prompting oil prices to tumble nearly $110 since peaking in July.

Oil has bounced off the lows of $32-$33 a couple of times, and with talk of more OPEC cuts in March, we're probably pretty close to the bottom -- we should see the range of plus/minus $40 in the mid-term, Nunan added.

But the caveat is that it all depends on the economy -- whether Obama's package is able to put a floor to the slide in the broader economy.

(Editing by Michael Urquhart)