* U.S. crude stockpiles down 5.2 mln bbls - API
* Gasoline, distillate inventories rise - API
* June new housing starts up 14.6 pct
* Wall street stocks rise on data, earnings
* Coming Up: U.S. govt oil stock data 1430 GMT Wednesday (Recasts, updates throughout)
By Selam Gebrekidan
NEW YORK, July 19 (Reuters) - Crude oil rose on Tuesday as investor confidence rose on strong U.S. housing data and renewed hope for an agreement in Washington on thorny budget issues.
U.S. housing starts rose to a six-month high in June, up 14.6 percent from a month ago, pointing to a resilient economic recovery, data from the Commerce Department showed, giving crude a lift in early U.S. trade. [ID:nN1E76I0AD]
Markets gained momentum later in the day after President Barack Obama suggested progress was being made toward a $3.75 trillion deficit reduction deal centered around entitlement reform. [ID:nN1E76H1Y0]
September Brent crude
U.S. crude for August delivery
U.S. crude extended gains in late activity after data from the American Petroleum Institute showed a steep drawdown in crude oil inventories for the week to July 15, as refinery runs rose. [API/S]
The late gains for U.S. crude pushed down the premium of September Brent to September U.S. futures by 84 cents to $18.95.
"Fundamentally, nothing much has changed, but the strength in the housing starts and the strength in the euro helped find new length this morning," said Carl Larry, Director of Blue Ocean Brokerage in New York.
"We could also see some pressure on Brent crude because of the heavy West African market. There is still a lot of cargoes out there looking for homes," he added.
Traders said several Nigerian cargoes for August had not been sold, although availability of some crude streams from the OPEC nation could tighten in September. [ID:nL6E7IJ2LU]
The euro rose against the dollar on hopes policymakers may reach a deal to provide further aid for Greece at a summit later this week, though a lack of a long-term solution for the country's debt crisis could keep the single currency vulnerable. [USD/] The weaker dollar often lifts dollar-denominated commodities.
RANGEBOUND
Even with Tuesday's gains Brent crude futures prices held within the range it traded over the course of the past week and failed to break through resistance around $118.90 a barrel.
Along with the upbeat economic news, oil found support support expectations the International Energy Agency (IEA) would not release emergency stocks for a second time.
IEA executive director said the IEA had not decided yet on whether another release was needed, and French Energy Minister Eric Besson said there were no plans for another release. [ID:nL3E7IJ1HR] [ID:nLDE76I1ID]
The IEA in June announced a release of 60 million barrels from emergency stockpiles for one month - the third such move in the agency's history - in a temporary measure to fill a supply gap caused by disruptions in Libyan output. (Additional reporting by Gene Ramos and Matthew Robinson in New York, Simon Falush in London, Seng Li Peng in Singapore; Editing by Marguerita Choy)