Oil up on short-covering after stocks build

SINGAPORE (Reuters) - Oil rose on Thursday on short covering after a hefty increase in U.S. crude oil stocks compounded concerns of a slowing economy in the world's top energy consumer and led to losses of more than $3 over two days.

U.S. light crude for February delivery CLc1 was up 26 cents at $91.10 a barrel by 0158 GMT.

The contract settled down $1.06 at $90.84 on Wednesday, up from an intraday low of $89.26, the lowest in nearly a month, after weekly data showed a larger-than-expected rise in U.S. crude inventories.

Prices had already tumbled $2.30 on Tuesday on a surprise drop in U.S. retail sales in December and a record quarterly loss at the U.S. largest bank Citigroup Inc. (C.N: Quote, Profile, Research).

London Brent crude LCOc1 for March was up 10 cents at $89.60.

"After a $10 loss from the record $100, prices are just going to bounce back on short-covering. There is no fundamental bullish news and after short-covering prices will go down again," said Ken Hasegawa of brokerage company Newedge.

U.S. crude stocks swelled by 4.3 million barrels to 287.1 million barrels last week, the first build in nine weeks, and well above the 600,000 barrels rise forecast, the Energy Information Administration data showed.

Products stocks also rose with gasoline stocks up 2.2 million barrels for the 10th straight week while distillate stocks, which include heating oil and diesel fuel, rose for the third consecutive week, by 1.1 million

In addition, the arrival of U.S. refinery maintenance season is expected to cause a decline in crude usage. The report showed a drop of 760,000 barrels per day in crude runs at domestic refineries to 15.1 million bpd.

OPEC officials have multiplied hints that they do not see the need to increase supplies when the organization meets on February5.

Oil prices are likely to range between $80 and $90 a barrel in the first quarter but are hard to forecast for the remainder of 2008 due to the possible impact of the subprime crisis, OPEC's president said on Wednesday.

Chakib Khelil said in a briefing for businessmen in Algiers that if oil inventories recovered in the second quarter of the year, he did not see why OPEC should raise output.

The International Energy Agency, an adviser to industrial countries, on Wednesday cut its 2008 global demand growth forecast by 130,000 barrels per day to 1.98 million bpd and said it may lower the figure further if a U.S. economic slowdown accelerates.