* Fed Chairman Bernanke's speech to offer clues on outlook
* U.S. July existing home sales data due later
* OPEC seen keeping supply targets steady at Sept meeting
By Jennifer Tan
SINGAPORE, Aug 21 (Reuters) - Oil eased below $73 a barrel
on Friday, reversing an earlier surge to a seven-week high, as
optimism over the pace of demand recovery in top energy
consumer, the United States, faded.
Data on Wednesday from the U.S. Energy Information
Administration (EIA) showing a surprise 8.4 million barrel
plunge in weekly U.S. crude inventories -- against analysts'
forecasts for a 1.3 million barrel build -- had buoyed
sentiment. []
But oil's surge proved short-lived as consensus grew on
Thursday that this was due to a fall in imports rather than
signs of a genuine rebound in U.S. fuel demand. []
The market will scour Federal Reserve Chairman Ben
Bernanke's speech before the Federal Reserve Bank of Kansas
City Economic Symposium later in the day for more clues on the
outlook for the world's largest economy.
By 0240 GMT, the new front month contract for October
delivery <CLc1> was down 14 cents at $72.77 a barrel, off a
seven-week high of $73.24 earlier. It had settled 92 cents
lower at $72.91 the previous day. London Brent crude for
October <LCOc1> was down 21 cents at $73.12.
Oil is on track for a 7.8 percent gain this week.
"Wednesday's inventory report was definitely positive for
the market, but the data is volatile, and you need to see a
trend forming, rather than a one-off decline, before it gets
fully priced into the market," said Ben Westmore, commodities
analyst with the National Australia Bank.
"Although sentiment is positive, it's very shaky, as
fundamentals are still weak. You will see more volatility until
the fundamentals correct," he said, adding that crude was
likely to trade in a range of $70-$75 next week.
So far, U.S. economic signals have been mixed. the index of
leading economic indicators rose for a fourth month in July,
signalling that the recession was abating, but data released on
Thursday also showed the number of U.S. workers filing new
claims for jobless benefits unexpectedly rose last week.
[] []
As yet, there are also few signs of recovering U.S. fuel
demand. Freight traffic across North America fell 17.9 percent
in the week ended Aug. 15 from the same 2008 week, a trade
group said on Thursday in a weekly report. []
Fed Chairman Bernanke's speech at the Federal Reserve Bank
of Kansas City Economic Symposium in Jackson Hole, Wyoming at
1400 GMT could shed more light on the economy's pace of
recovery from its worst recession in 70 years.
The National Association of Realtors will release existing
home sales for July at 1400 GMT. Economists polled by Reuters
forecast a total of 5.00 million annualised units versus 4.89
million in June.
Apart from economic data, traders will also take cues from
the direction of currency and equity markets.
U.S. stocks rose for a third straight session on Thursday
with financial shares leading gains after U.S. manufacturing
data and a rebound in Chinese stocks reassured investors.
China equities, viewed by investors as a weathervane of
risk sentiment, tumbled to a two-month low earlier this week on
disappointment that Beijing had not taken steps to prop up the
market after the key index plunged 20 percent from two weeks
ago.
The yen rose broadly against major currencies on Friday as
investors remained worried about the potential for further
weakness in Chinese shares and shied away from risky
investments. []
On the supply front, increased oil output to a year-high
from OPEC president Angola, flouting agreed limits, has helped
stack the odds against any formal change when the producer
group meets in September.
Without a sharp slide in crude prices, OPEC is likely to
leave its output targets unchanged when it meets on Sept. 9,
most OPEC delegates and analysts said. []
