UPDATE 9-Oil gains on U.S. storage figures

* U.S. crude inventories surprise with 3.6 mln barrel fall
* Distillate builds at twice forecast
* Strong Japan machinery orders lend some support
* Onshore crude storage to run out Q1 2016 -PIRA

(Recasts with EIA data)
By Simon Falush and Barani Krishnan
LONDON/NEW YORK, Dec 9 (Reuters) - Oil prices gained ground
on Wednesday after an unexpected fall in crude storage in the
United States, offering a rare signal that the global glut may
be easing.
Brent crude oil futures LCOc1 were up 66 cents at $40.92 a
barrel by 1554 GMT and U.S. West Texas Intermediate (WTI) crude
futures CLc1 stood at $38.18, up 67 cents from their last
settlement.
U.S. crude stocks fell by 3.6 million barrels last week, the
Energy Information Administration said, breaking a streak of
builds and surprising investors after analysts forecast an
increase in stocks of 252,000 barrels.
"It's a big surprise draw, with total combined stocks of
crude oil and refined products lower on the week. I would call
the data bullish," said Dominick Chirichella, senior partner at
the Energy Management Institute in New York.
The data, however, was not clear cut because it also showed
that distillate stocks rose by 5 million barrels, twice as much
as forecast.
Oil prices lost some momentum once investors digested the
detail in the data, with both Brent and U.S. crude retreating
from their initial gains of more than $1.
"The large rise in distillate fuels will likely work to make
the report bearish by day's end," said John Kilduff, partner at
New York energy hedge fund Again Capital.
The outlook for oil demand in Asia was boosted by news of an
unexpected jump in Japan's core machinery orders in October and
by reforms aimed at encouraging imports in China, including
those for energy-intensive machinery.
However, a strong dollar, soaring supplies and expectations
of a U.S. interest rate rise pointed to further downside in
prices.
"There was somewhat more positive data, but OPEC is not
going to support the market and I think there's a high
probability that we will break through the lows of 2008," said
Bjarne Schieldrop, chief commodities analyst at SEB in Oslo.
Brent oil fell to just above $38 a barrel in December 2008.
On Tuesday Brent dipped below $40 a barrel to touch its
lowest since February 2009.
Oil slumped after OPEC failed to agree a cut in production
quotas last week despite tumbling prices and the mounting supply
glut.
"Brent crude prices will continue to struggle due to a large
global commercial oil stock surplus, which PIRA estimates will
total 500 million barrels above normal levels by end-2015," PIRA
Energy said, adding that it expects onshore crude oil storage to
run out in the first quarter of 2016.

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