Oil surges nearly 5 pct on technical buying after U.S. inventory drop

By Barani Krishnan

NEW YORK (Reuters) - Crude oil jumped nearly 5 percent on Wednesday as important chart support prices held fast after nearly a week of selling, leading to technical buying that turned the market around abruptly.

Both Brent and U.S. crude oil futures jumped more than $3 a barrel in late morning trade, extending slight gains made after earlier data showing a drop in U.S. crude inventories last week.

Brent had lost more 10 percent of its value in the previous five sessions, falling below $60 a barrel but holding well above the major support of $55.

"I think it was triggered by some short-covering, and once it gets going it feeds upon itself," said John Saucer at Mobius Risk Group in Houston.

Buying accelerated after the market failed to make a new low despite news that stockpiles at the U.S. storage hub at Cushing, Oklahoma jumped nearly 3 million barrels, Saucer said.

Some analysts attributed crude's rise to a 4 percent pick up in gasoline demand from a year ago.

Preset buy-stop orders were triggered on the way up, said Saucer and other traders. Brent's next technical level was at $63.50, or 10 cents below Wednesday's peak, one trader said.

Brent for February delivery was up $2.33 at $62.34 a barrel by 1:15 p.m. EST (1815 GMT), after hitting a session high at $63.40.

U.S. crude's front-month contract rose $1.90 to $57.83 after a climbing earlier to $58.98.

(Additional reporting by Robert Gibbons and Jessica Resnick-Ault in New York, Libby George in London and Seng Li Peng in Singapore; Editing by Alden Bentley)