* Cushing crude stocks fell 1.6 mln bbls last week
* Technicals show Brent to rebound to $115/bbl [ID:nL4E7GJ04G]
* Coming Up: U.S. weekly unemployment claims at 1230 GMT
By Florence Tan
SINGAPORE, May 19 (Reuters) - Oil rose on Thursday for a second session as an unexpected drop in crude inventories in the United States helped prices rebound while wildfires in Alberta threatened Canadian supply.
The market is likely to remain volatile on concerns about the economic recovery in the United States and unresolved sovereign debt issues in the euro zone.
ICE Brent for July delivery
U.S. crude for June delivery
"The EIA data was very unexpected as U.S. crude inventories have been rising. It gave prices a bit of a kick-along," said Ben Le Brun, a Sydney-based markets analyst at CMC Markets.
Crude inventories in the United States dropped unexpectedly as refinery utilisation rates rose while imports fell. Stocks at Cushing, Oklahoma, the delivery point for NYMEX contracts, slid 1.6 million barrels, data from the Energy Information Administration showed late Wednesday.
Wildfires in Alberta threatened supply from neighbouring Canada. The country could more than double its output cuts over the next few days after shutting in close to 50,000 barrels per day of production on Tuesday. [ID:nN1724114]
Market sources said the shutdowns had yet to move prices for heavy crude, but cautioned that lengthy outages could tighten supplies.
The Federal Reserve's rate-setting panel also released its minutes on Wednesday, showing that most Fed officials prefer to raise rock-bottom interest rates before selling assets when the time comes to tighten policy. [ID:nN18279205]
But the minutes also stressed that the April discussion did not indicate the Fed was ready to start tightening policy any time soon. Money market futures are still not fully pricing in a rate hike for more than a year from now.
"It is going to be a gradual and transparent process. The Fed is not going to pull the rug out from underneath everyone," Le Brun said.
ECONOMIC RECOVERY
However, oil prices are expected to remain volatile as weak economic data from the United States and the ongoing debt crisis in the euro zone fuelled concerns about demand.
The debt problems in the euro zone "have the ability to soften demand depending on what happens to Greece and Portugal," Le Brun said.
The IMF warned Greece on Wednesday that it would fail to shore up its finances unless it redoubled reform efforts, and euro zone officials dismissed suggestions that a mild debt restructuring might help. [ID:nLDE74H13X]
Investors will scour data from the United States, such as the weekly unemployment claims due to be released later on Thursday, for indications of its economic health.
"Economic data in the United States is starting to soften a little bit so it's not going to have a good impact on oil prices," Le Brun said.
Oil investors may also be not as optimistic as before, he said.
"In the options market, the $70 put is the most actively traded contract and this could mean that investors think oil will be under pressure," Le Brun said.
(Editing by Clarence Fernandez)