Oil prices stable after mixed US energy report

Oil prices steadied as treders absorbed a mixed report on energy stockpiles in leading consumer the United States.

Oil prices steadied on Wednesday as traders absorbed a mixed report on energy stockpiles in leading consumer the United States.

New York's main futures contract, light sweet crude for delivery in March, was unchanged at 74.71 dollars a barrel, compared with Tuesday's closing level.

London's Brent North Sea crude for March delivery gained six cents to 73.35 dollars.

The US government's Department of Energy (DoE) announced Wednesday that crude oil inventories plunged 3.9 million barrels in the week to January 22.

That confounded market expectations for an increase of 900,000 barrels, according to analysts polled by Dow Jones Newswires.

However, the DoE also revealed that stockpiles of distillates -- including diesel and heating fuel -- rose by 400,000 barrels last week.

The news also surprised the market because analysts had forecast a sharp drop of 1.6 million barrels.

Gasoline (petrol) reserves increased two million barrels, compared with expectations for a smaller gain of 600,000 barrels.

- The large crude draw was positive but products continue to disappoint - said DnB Nor Markets analyst Torbjorn Kjus.

The weekly report is a key even for the oil market because the United States is the world's biggest energy consuming nation, followed by China.

Traders were meanwhile awaiting the outcome of the US Federal Reserve's latest monetary policy meeting, as well as President Barack Obama's first State of the Union address.

Oil prices fell on Tuesday as the market fretted about China's moves to tighten credit to cool economic growth, a move that could weaken energy demand in the Asian giant.

- With China's plans to tighten the money supply dampening sentiment in recent days, the market's focus has shifted to the United States - said analysts at the JBC Energy consultancy in Vienna.

- The two-day meeting of the Federal Open Market Committee will end today and it is largely expected that the record-low interest rate policy will be continued - they added.

''More market direction could come from US President Barack Obama's first State of the Union speech today, as he is expected to address the job market.''

''The President may also highlight his regulatory ambitions on the banking sector, possibly triggering a sell-off.''

Oil slumped last week on concerns about Chinese economic policy and after Obama unveiled plans to crack down on the US financial sector, hitting investor confidence.