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Crude oil prices rose over $77 a barrel Wednesday, supported by lower-than-expected builds in U.S. oil inventories last week, a weak U.S. dollar and gains on Wall Street.

Crude stocks rose 1.0 million barrels, the Energy Information Administration said, less than the 1.2 million barrel increase forecast.

U.S. crude for January rose $1.94 to settle at $77.96 a barrel.

"The EIA report prompted some modest price support as the 1 million barrel crude stock build was slightly smaller than expectations and well below yesterday’s API guidance," said Jim Ritterbusch, president, Ritterbusch & Associates in Galena, Illinois.

On Tuesday, the American Petroleum Institute released a report showing a 3.3 million-barrel rise in stocks.

Prices were also buoyed when the U.S. dollar fell to a 15-month low after U.S. data on jobless claims, personal consumption and new home sales fed economic optimism.

Consumer spending rose more than expected in the world’s largest economy, while new jobless benefits claims dropped. New U.S. home sales in October rose to their highest level in a year.

Wall Street stocks rose after the data, boosting crude, which has more than doubled from below $33 in December, though far below its record of more than $147 hit in July 2008.

Soft fundamentals

Analysts noted that the EIA data showed demand for crude oil is still weak.

"Fundamentals remain soft … there’s no reason to open the champagne here. Refinery runs are nothing to write home about, under 14 million barrels a day," said Antoine Halff, first vice president, deputy head of research, Newedge Group, New York.

Refinery utilization rates, while up 0.9% from the prior week, were still 5.9% below year-ago levels, according to the EIA data.

Gasoline inventories rose 1 million barrels to 210.1 million barrels, above analyst expectations for a 300,000 barrel rise.

Distillate stockpiles, which includes heating oil and diesel, dropped 500,000 barrels to 166.9 million barrels.

"The (distillate) draw was slightly larger than consensus expectations, but puts only a small dent in the major surplus," said Timothy Evans, energy analyst at Citi Futures Perspective in New York.

U.S. crude was expected to average $75.40 a barrel in 2010, a Reuters poll showed on Wednesday, but analysts said ample supplies would keep short-term price growth in check. 

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