* Dollar weakens, equities rise, lifting oil
* U.S. EIA lowers 2010 global demand growth; ups 2011
* Coming Up: API U.S. oil inventories at 2030 GMT
(Recasts, updates prices, market activity, new byline, changes
dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Sept 8 (Reuters) - Oil rose on Wednesday for the
first time in three sessions, bouncing with equities and
supported by a weaker dollar as concerns over the European
banking system eased and investors cautiously bought riskier
assets.
Later on Wednesday, the focus will shift from outside
markets to fundamentals with weekly oil inventory data expected
to show crude stocks rose for a third consecutive week, along
with an increase in supplies of distillates, which includes
diesel fuel and heating oil.
U.S. crude for October delivery <CLc1> rose 87 cents, or
1.17 percent, to $74.96 a barrel by 1:50 p.m. EDT (1750 GMT),
having traded from $73.37 to $75.39.
"Equity markets are bouncing today, which is some support
for the crude market, and there's chatter about forward buying
as a bet on 2011 economic recovery," Tim Evans, analyst at Citi
Futures Perspective in New York, said in a research note.
The ICE Brent contract witnessed active trade for a second
day running as the October <LCOc1> contract rose 73 cents to
$78.47, having earlier hit a one-month high of $78.85.
The premium for Brent crude to the U.S. contract narrowed
slightly to around $3.50 a barrel after earlier reaching $3.91,
its highest since mid-May and widening by $2 in just three
sessions as the U.S. market sagged under the weight of bulging
inventories. (Graphic: http://link.reuters.com/qak32p )
Maintenance at North Sea fields and a strong Urals crude
market have also contributed to Brent's premium.
European shares reversed early losses and Wall Street
gained, helped by a successful Portuguese debt offering that
eased risk aversion. []
The euro <EUR=> recovered and rose against the dollar and
the yen after Ireland's finance ministry said the nationalized
Anglo Irish Bank will be split into a funding bank and an asset
recovery bank to wind down its assets. [] The dollar index
<.DXY> was weaker, slipping after early strength.
A raised forecast for 2010 global oil demand and lowered
forecast for non-OPEC crude oil production growth in 2010, both
issued by the U.S. Energy Information Administration on
Wednesday added to the bullish sentiment. []
While boosting the 2010 demand growth forecast by 50,000
barrels per day, the EIA lowered its forecast for 2011 demand
growth by 100,000 bpd. []
Another potentially bullish factor came in the form of
Tropical Storm Igor, which organized in the far eastern
Atlantic Ocean and was expected to strengthen into a hurricane
within the next few days. []
It was too early to gauge Igor's potential threat to the
Caribbean or to U.S. energy interests in the Gulf of Mexico.
Weekly U.S. industry and government oil inventory
statistics were delayed by a day by Monday's Labor Day holiday
in the United States.
U.S. crude inventories were expected to risen 900,000
barrels, according to a Reuters poll on Wednesday. []
Wednesday's expanded survey also forecast a 600,000 barrel
increase in distillate stockpiles and a 900,000 barrel decline
in gasoline supplies.
The industry group American Petroleum Institute will
publish its weekly inventory report at 4:30 p.m. EDT (2030 GMT)
on Wednesday. The U.S. Energy Information Administration's
report will arrive at 11:00 a.m. EDT (1500 GMT) on Thursday.
(Additional reporting by Gene Ramos in New York, David Turner
and Marie-Louise Gumuchian in London and Alejandro Barbajosa in
Singapore; Editing by David Gregorio)
