Oil edges above $116 after rise on U.S. data

Oil edges above $116 after rise on U.S. data

LONDON (Reuters) - Oil rose above $116 a barrel on Thursday, extending gains after a $3 rise the previous session following a larger-than-expected drop in U.S. crude and gasoline inventories.

Concerns about the security of energy transit routes through the Caucasus also provided some support, although analysts said the mood was still predominantly bearish.

U.S. crude was up 45 cents at $116.45 by 1129 GMT, off a high of $117.42 hit earlier in the session. London Brent climbed 48 cents to $113.95.

"Fundamentals certainly warrant a rebound," said Jan Stuart, economist at UBS, but added that oil markets still looked vulnerable in the near-term.

"Fundamental news may continue to matter very little until markets get out of their deep, bearish rut."

Oil prices rose on Wednesday after U.S. government data showed crude stocks in the world's top energy consumer dropped by 400,000 barrels last week, while gasoline inventories fell by 6.4 million barrels.

The fall in gasoline stocks was much larger than analysts' expectations of a 2.1-million-barrel decline. Distillate stocks also unexpectedly fell.

Disruptions to energy exports from the Caspian region have helped to underpin prices as Western powers try to shore up support for a shaky ceasefire between Russian and Georgian troops around the breakaway region of South Ossetia.

British oil group BP resumed gas exports from Azerbaijan to Turkey via Georgia, but the oil pipeline to the Black Sea port of Supsa remained closed.

BP had shut the Baku-Supsa oil pipeline and the gas pipeline to Turkey early on Tuesday because of the military conflict.

A third BP pipeline that runs through Georgia, the Baku-Tblisi-Ceyhan oil pipeline was also shut after it was damaged by an explosion last week. Repairs have begun on the pipeline, but it is not known when it will reopen.

Oil is way off its peak of $147.27 a barrel hit in mid-July, and analysts have said it is unlikely to move back to near that level soon, in part because of weaker demand.

High energy prices in many parts of the world have prompted motorists to drive less.

The U.S. Transportation Department on Wednesday said Americans drove 12.2 billion miles, or 4.7 percent, less in June compared with a year earlier. It was the eighth month in a row that driving had declined