NYMEX-US crude up on stock fall; Mideast truce hope weighs

SEOUL, Nov 21 (Reuters) - U.S. crude rose above $87 a barrel

on Wednesday due to an unexpected fall in U.S. crude stock and

jittering tensions in the Middle East, recovering after a steep

drop from a one-month high on hopes of a truce between

Palestinians and Israelis.

FUNDAMENTALS

* U.S. crude oil futures added 55 cents to $87.30 a

barrel as of 0020 GMT, after it settled down $2.53 at $86.75 a

barrel.

* Brent crude settled down $1.87 at $109.83 a barrel

previously.

* U.S. crude oil inventory tumbled last week due to a drop

in imports, data from the American Petroleum Institute released

on Tuesday showed. Total U.S. crude stock fell by more than 1.9

million barrels in the week to Nov. 16, after analysts polled by

Reuters had forecast a build of 900,000 barrels.

* The market will now await data from the U.S. Energy

Information Administration (EIA), due out on Wednesday at 1530

GMT, for confirmation of the API report.

* Israeli air strikes shook the Gaza Strip and Palestinian

rockets struck across the border as U.S. Secretary of State

Hillary Clinton held talks in Jerusalem in the early hours of

Wednesday, seeking a truce that can hold back Israel's ground

troops.

* U.S. housing starts rose to their highest rate in more

than four years in October, suggesting a housing market recovery

is gaining steam, even though permits for future construction

fell.

* U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday

that 2013 could be a "very good year" for the U.S. economy if

politicians can strike a quick deal to avoid the so-called

fiscal cliff.

* Euro zone finance ministers are considering allowing

Athens to buy back up to 40 billion euros of its own bonds at a

discount as one of a number of measures to cut Greek debt to 120

percent of GDP within the next eight years.

MARKETS NEWS

* Helped by hopes that euro zone finance ministers will

agree to unblock aid to Greece, the euro held near two-week lows

against the dollar.

* Wall Street halted its two-day rally on Tuesday, after

Bernanke's comment that the central bank lacks tools to cushion

the U.S. economy from the impact of the "fiscal cliff." The Dow

Jones industrial average slipped 0.06 percent to

12,788.51 at the close. But the Standard & Poor's 500 Index

edged up 0.07 percent to finish at 1,387.82. The Nasdaq

Composite Index inched up 0.02 percent to close at

2,916.68.

* The Nikkei share average rose to a two-month high in early

trade on Wednesday, led by exporters after the yen hit a

seven-month low versus the dollar on expectations the Bank of

Japan will be pushed to take aggressive stimulus action under a

likely new government.

DATA/EVENTS

* The following data is expected on Wednesday (GMT):

1330 U.S. Weekly jobless claims

1358 U.S. Markit Manufacturing Flash PMI Nov

1455 U.S. TR/U Mich final sentiment index Nov

1500 U.S. Leading indicators Oct

1630 U.S. EIA weekly petroleum status report

(Reporting by Meeyoung Cho; Editing by Richard Pullin)

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