SINGAPORE Oil prices crept higher, consolidating gains made after a drop in United States fuel stocks suggested the country's economic downturn might not be denting fuel demand as much as previously feared, Reuters said.

U.S. benchmark light crude traded nine cents up in Asia to $26.86 a barrel, extending Wednesday's 42-cent gain in New York.

Oil markets were given a boost mid-week by fresh weekly data showing declines in crude stocks in the United States and a slim year-on-year rise in consumption of refined products.

Both the government body, the Energy Information Administration (EIA) and industry group the American Petroleum Institute (API) recorded declines in crude and gasoline stocks in the latest data.

The gasoline falls helped ease worries that the U.S. economic slowdown was keeping American motorists off the road and forcing industrial users to cut back on the use of fuels.

The EIA said the four-week average for U.S. refined products demand was up 0.2 percent versus the same period 2000.

"These numbers have given heart to the market and are being interpreted as an early indication of improving demand," said Simon Games-Thomas at NM Rothschild & Sons in Sydney.

"I am not yet convinced but am maintaining an open mind," he said in a daily report.

Analysts are keenly watching data for any signs of a pick up in demand to gauge how fuel supplies will shape up as the northern hemisphere prepares for winter.

Refiners should soon start to crank up production of winter heating fuels and traders want to see how OPEC's third production cut this year -- due to come into effect on September 1 -- will impact crude supplies.

OPEC's President Chakib Khelil reassured the market earlier this week that the Organization of the Petroleum Exporting Countries would raise output by January if the U.S. economy started to show signs of recovery.

OPEC will take one million barrels out of its daily crude flow at the beginning of next month, leaving the cartel's output some 13 percent, or 3.5 million barrels per day, below levels at the beginning of the year. 11-27-52.H11