* Russia says open to oil meeting, boosting Brent
* EIA data shows bigger than expected rise in inventories
* Rise from $32.30 seen as technical, gains may be limited (Updates with EIA)
By Amanda Cooper
LONDON, Feb 3 (Reuters) - Oil rose by as much as 5 percent on Wednesday after investors took advantage of a drop in the U.S. dollar and of earlier weakness in the crude price, despite weekly data showing a surprisingly large rise in U.S. inventory.
The Energy Information Administration said crude inventories rose by 7.8 million barrels in the last week, topping analysts' expectations for a rise of 4.8 million barrels, as imports jumped and refiners trimmed throughput. EIA/D
Brent for April delivery LCOc1 rose $1.75 to $34.47 a barrel by 1620 GMT, up from the day's low at $32.30. U.S. crude futures rose $1.62 to $31.50, off a session low of $29.40.
"The real move is due to the fact that, in the longer-term, prices of $30 are unjustified, so whoever had a short position in the market, would (see this as) a good time to close this position, due to the high volatility and high uncertainty in the market," Commerzbank (DE:CBKG) strategist Eugen Weinberg said.
The dollar index .DXY fell by more than 1 percent after data showed the U.S. services industry grew more slowly than expected last month, which helped fuel the rally in oil. FRX/
In the last year or so, speculators had racked up the largest short, or bearish, position in crude oil in history and part of the current volatility in the price has come as a result of some of those positions being closed.
"People say 'I think the market has bottomed, there's no place else to go but up from here' - I don't agree with that premise. I think we will make new lows before we start moving up higher - there's just so much oil out there you don't know what to do with it," Sal Umek of the Energy Management Institute in New York said.
"The bears are controlling the market, the bulls are only going to go in and try to get a little bit here and there"
The 70 percent drop in the crude price over the last 18 months has forced even the largest oil companies such as BP BP.L , ExxonMobil XOM.N or Shell RDSa.L to cut jobs and slash spending, and has also hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia and even some of the richer Gulf nations such as Bahrain.
Demand for oil, particularly in Asia, proved robust last year, but not enough to absorb near-record supply and ballooning inventories of unwanted crude.