* Russia says open to oil meeting, boosting Brent
* EIA data shows bigger than expected rise in inventories
* Rise from $32.30 seen as technical, gains may be limited
(Updates with EIA)
By Amanda Cooper
LONDON, Feb 3 (Reuters) - Oil rose by as much as 5 percent
on Wednesday after investors took advantage of a drop in the
U.S. dollar and of earlier weakness in the crude price, despite
weekly data showing a surprisingly large rise in U.S. inventory.
The Energy Information Administration said crude inventories
rose by 7.8 million barrels in the last week, topping analysts'
expectations for a rise of 4.8 million barrels, as imports
jumped and refiners trimmed throughput. EIA/D
Brent for April delivery LCOc1 rose $1.75 to $34.47 a
barrel by 1620 GMT, up from the day's low at $32.30. U.S. crude
futures rose $1.62 to $31.50, off a session low of $29.40.
"The real move is due to the fact that, in the longer-term,
prices of $30 are unjustified, so whoever had a short position
in the market, would (see this as) a good time to close this
position, due to the high volatility and high uncertainty in the
market," Commerzbank (DE:CBKG) strategist Eugen Weinberg said.
The dollar index .DXY fell by more than 1 percent after
data showed the U.S. services industry grew more slowly than
expected last month, which helped fuel the rally in oil. FRX/
In the last year or so, speculators had racked up the
largest short, or bearish, position in crude oil in history and
part of the current volatility in the price has come as a result
of some of those positions being closed.
"People say 'I think the market has bottomed, there's no
place else to go but up from here' - I don't agree with that
premise. I think we will make new lows before we start moving up
higher - there's just so much oil out there you don't know what
to do with it," Sal Umek of the Energy Management Institute in
New York said.
"The bears are controlling the market, the bulls are only
going to go in and try to get a little bit here and there"
The 70 percent drop in the crude price over the last 18
months has forced even the largest oil companies such as BP
BP.L , ExxonMobil XOM.N or Shell RDSa.L to cut jobs and
slash spending, and has also hit the budgets of oil-dependent
nations such as Nigeria, Venezuela, Russia and even some of the
richer Gulf nations such as Bahrain.
Demand for oil, particularly in Asia, proved robust last
year, but not enough to absorb near-record supply and ballooning
inventories of unwanted crude.