* Dollar weakens, equities rise, lifting oil
* U.S. EIA lowers 2010 global demand growth; ups 2011
* Coming Up: EIA oil data at 11 a.m. EDT Thursday
(Recasts, updates with API data and oil price reaction)
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.
"The complex advanced by about 0.7 percent today with some
help from an upswing in risk sentiment," Jim Ritterbusch,
president at Ritterbusch & Associates in Galena, Illinois, said
in a note.
The focus shifted to fundamentals late on Wednesday when
industry group American Petroleum Institute reported U.S. crude
oil inventories fell 7.3 million barrels last week, against a
forecast for stockpiles to have risen. []
U.S. crude for October delivery <CLc1> rose 58 cents, or
0.78 percent, to settle at $74.67 a barrel, having traded from
$73.37 to $75.39. In post-settlement trading, crude futures
extended those gains after the API data, trading at $74.88, up
79 cents at 5:05 p.m. EDT (2105 GMT).
The API reported gasoline stocks rose 654,000 barrels and
distillates, which include diesel fuel and heating oil, rose
1.3 million barrels.
U.S. crude inventories had been forecast to be up 900,000
barrels, according to a Reuters poll ahead of the API report on
Wednesday. []
A 600,000-barrel increase in distillate stockpiles and a
900,000-barrel decline in gasoline supplies were also forecast.
The U.S. Energy Information Administration's report will arrive
at 11 a.m. EDT (1500 GMT) on Thursday.
The ICE Brent crude contract witnessed active trade for a
second day running as the October <LCOc1> contract rose 43
cents to settle at $78.17, having earlier hit a one-month high
of $78.85.
The premium for Brent crude to the U.S. contract narrowed
slightly to $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 in another low-volume session, 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 successful bond auctions in Portugal also helped the
euro. The dollar index <.DXY> was weaker, slipping after early
strength.
"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.
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. []
With little disruption to energy operations from tropical
weather so far this season, the U.S. National Hurricane Center
was monitoring newly formed Tropical Storm Igor and two other
systems in the Atlantic Ocean. The systems were not yet
expected to threaten energy operations in the Gulf of Mexico.
[]
(Additional reporting by David Sheppard and Gene Ramos in New
York, David Turner and Marie-Louise Gumuchian in London and
Alejandro Barbajosa in Singapore; Editing by Lisa Shumaker)
