UPDATE 8-Oil rises, supported by U.S. fuel stock draws but weighed by crude build

* U.S. crude stocks rise 9.3 mln bbls in week to Oct. 11
* Refining output declines sharply
* Analysts cite weakened demand as headwind for oil bulls

(Updates with settlement prices, adds commentary)
By Stephanie Kelly
NEW YORK, Oct 17 (Reuters) - Oil prices rose about 1% on
Thursday after draws in U.S. fuel inventories, but gains were
capped by a larger-than-expected rise in crude stockpiles and a
series of weak economic figures.
Global benchmark Brent crude LCOc1 rose 49 cents, or 0.8%,
to settle at $59.91 a barrel. U.S. WTI crude CLc1 gained 57
cents, or 1.1%, to settle at $53.93 a barrel.
U.S. gasoline stocks USOILG=ECI fell by 2.6 million
barrels in the week to Oct. 11, while distillate stockpiles
USOILD=ECI , which include diesel and heating oil, fell by 3.8
million barrels, the U.S. Energy Information Administration said
on Thursday. But a soaring rise in crude inventories offset the draws.
Crude stocks rose by 9.3 million barrels, far surpassing
estimates for a build of 2.8 million barrels.
The rise was the result of a reduction in refining output
for the week to its lowest capacity use nationwide since
Hurricane Harvey in September 2017. Refining capacity use fell
to 83.1% as refiners shut in capacity across the country.
"This is generally a bullish report," said Phil Flynn,
senior energy analyst at Price Futures Group in Chicago. "Part
of the problem for the build is that refineries are not running.
Refinery runs fell down, which is a concern."
Overall imports have fallen, in part due to sanctions
imposed on Chinese shipping firm COSCO that have raised freight
costs.
The United States imposed sanctions on COSCO Shipping Tanker
(Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman
& Ship Management Co for allegedly carrying Iranian
oil. Adding to concerns about the global economy, and therefore
energy demand, U.S. retail sales fell for the first time in
seven months, while housing starts and industrial output dropped
as well. Earlier data showed a moderation in job growth and
services sector activity. "If we see more indications of slowing demand, I think the
market is going to continue to sink lower," said Gene McGillian,
vice president of market research at Tradition Energy in
Stamford, Connecticut.
Brexit developments gave oil prices some support. European
Union leaders gave their unanimous backing to a Brexit deal with
Britain on Thursday, putting the onus on Prime Minister Boris
Johnson to secure the British parliament's approval for the deal
in a vote in two days. Analysts have said any agreement that avoids a no-deal
Brexit should boost economic growth and oil demand.