* Benchmark U.S. crude reverses losses as Wall Street opens
* Brent premium to U.S. crude touches highest since mid-May
* Coming Up: API U.S. oil inventories at 2030 GMT
(Adds comment, updates prices)
By David Turner and Marie-Louise Gumuchian
LONDON, Sept 8 (Reuters) - Oil rebounded on Wednesday,
reversing losses earlier in the day, after U.S. equities rose.
Traders attributed oil's boost as Wall Street opened to the
strong correlation for much of this year between oil prices and
equities, saying they are both asset classes that rise when risk
appetite increases on hopes of economic recovery.
James Hughes, analyst at CMC Markets in London, said: "It's
very hard to break this risk-on, risk-off pattern. Everything at
the moment is going the same way, and over the next few weeks
it's very hard to look at what will break assets out of this
swing -- not just in oil but in everything."
U.S. crude for October <CLc1> was up 20 cents to $74.29 a
barrel by 1434 GMT, having earlier hit a low of $73.37.
The climb in U.S. equities in early Wall Street trading was
matched by a similar rise in European shares. <.SPX> []
<> [].
In early Wednesday trading sharp drops in Asian equities,
including a 2.2 percent fall in the Nikkei 225, had hit oil.
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The market is awaiting the release of weekly U.S. industry
and government statistics on oil inventories, delayed by a day
following Monday's Labor Day holiday in the United States.
"Last week's data was a bit weak and this week will be
interesting as it will reflect what happened just ahead of the
Labor Day weekend," Christophe Barret, an oil analyst at Credit
Agricole, said.
BRENT-U.S. CRUDE SPREAD
U.S. crude was trading at a steep discount of $3.34
<CL-LCO1=R> to futures based on the European Brent benchmark
<LCOc1>. The gap reached a peak of $3.91 earlier in the day, its
highest since mid-May. Brent was 10 cents down on the day at
$77.64.
Eugen Weinberg, commodities analyst at Commerzbank in
Frankfurt, said U.S. crude's discount to Brent was "definitely
due to investment outflow, weaker demand, and high oil
inventories (in the United States)."
Total U.S. petroleum stockpiles are at their highest since
weekly records began in 1990.
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For a graphic on Brent's premium to WTI, click:
http://graphics.thomsonreuters.com/gfx1/DTR_20100809113449.jpg
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Maintenance at North Sea fields and a strong Urals crude
market have also contributed to Brent's premium.
However, U.S. crude inventories probably fell for the first
time in three weeks last week, down by a moderate 600,000
barrels, as refineries reduced imports in preparation for stormy
weather, according to a Reuters poll on Tuesday. []
The American Petroleum Institute will publish its weekly
U.S. industry statistics on inventories at 2030 GMT on Wednesday
with the Energy Information Administration publishing government
figures on Thursday.
The poll also forecast a 700,000 barrel increase in
stockpiles of distillates, including heating oil and diesel
fuel, and a 900,000 barrel decline in gasoline supplies.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Anthony Barker)
