Oil holds 1-year high above $81

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NEW YORK (Reuters) -- Oil jumped nearly 3% to settle above $81 a barrel Wednesday, its highest close in over a year, due to bullish U.S. crude inventory data and a rise in U.S. equities that showed optimism about the economy.

U.S. crude for December rose $2.25 to settle at $81.37 a barrel, the highest since Oct. 9, 2008.

Weekly data from the Energy Information Administration revealed a larger-than-expected 2.3-million-barrel draw in gasoline stocks in the world's largest energy consumer last week, while crude inventories rose 1.3 million barrels, less than the expected 1.8 million-barrel rise.

"The gasoline draw was bullish, and the same for distillates, with refinery rates nearly unchanged," said Mike Zarembski, senior commodities analyst for OptionsXpress in Chicago.

Traders also had their eyes on the weakness of the dollar and stronger equities as price drivers.

"As long as the dollar is down and stocks are up, traders want to buy energies," Zarembski added.

Wall Street gained on Wednesday as results from banks, including Morgan Stanley, topped expectations and on increased optimism about the technology sector's profit outlook.

The dollar sank against a basket of other currencies as expectations that U.S. interest rates will remain very low weighed on the greenback. The euro rose above $1.50 for the first time since August 2008.

A falling dollar makes oil relatively cheap to holders of other currencies.

The weak dollar and anticipation of future economic recovery have been the main drivers of the oil price rally for the past few months.

U.S. crude has risen around 120% from the Dec. 31 2008 low of $36.94 to the current session high on Wednesday to above $81.

China's State Council voiced confidence that China's economy has recovered from the global financial crisis, performing better than expected in the first nine months of the year.

The International Energy Agency, which represents 28 industrialized countries, has warned that the fast rise in prices could pose a risk to global economic recovery.

But Nigeria's oil minister, Rilwanu Lukman, said $80 was a fair price for oil and one that should encourage investment in new supplies.