Oil above $68 after surprise U.S. crude stock draw

SINGAPORE, June 1 (Reuters) Oil held steady above a barrel on Friday, building on the previous day's gains after an unexpected fall in U.S. crude oil stockpiles.

London Brent crude oil currently a better indicator of the global market than U.S. oil, rose 21 cents to .25 a barrel by 0223 GMT, having settled up 20 cents on Thursday. U.S. crude was up 18 cents at .19 a barrel.

''Prices are (higher) in reaction to a fall in U.S. inventories when most people expected them to rise. But it's a fairly stable situation,'' said Andrew Harrington, industry analyst from ANZ Bank in Australia.

U.S. crude oil stocks dropped by 2 million barrels last week on slowing imports, which fell by over 800,000 barrels per day (bpd), government data showed. Analysts had expected an increase in stocks of 700,000 barrels. S] Gasoline stocks in the world's biggest energy user rose by 1.3 million barrels, in line with market expectations, backed by robust imports that swelled to 1.6 million bpd.

The build in gasoline stocks came despite steady refinery operations and undeterred demand growth, with four-week average deliveries up 1.4 percent from a year ago at 9.417 million bpd.

Brent prices have retreated from last week's eight-month high of nearly a barrel on growing hopes that gasoline supplies will last through the peak summer season, but losses have been checked by violence in number-eight exporter Nigeria.

A protest by villagers at a major oil export pipeline complex in Nigeria dragged on for a third day on Thursday, keeping 150,000 bpd of oil production shut, authorities said.

An unrelated pipeline leak in nearby Nembe cut another 77,000 bpd, bringing the total amount of Nigerian output lost to 922,000 bpd, a third of the country's total output.

Adding to supply risks, the 2007 Atlantic storm season will be ''very active'' with a better than 70 percent chance a major hurricane will make landfall on the U.S. coastline, with a 50-50 chance that would be on the Gulf of Mexico near oil fields and refineries, a closely watched forecasting team said on Thursday.

The six-month hurricane season that formally begins on Friday will spawn 17 tropical storms, with nine growing to hurricane strength, the Colorado State University said in an updated report that reaffirmed its original forecast.

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