* Oil supported by global equities rally, Iran missile
tests
* U.S. oil inventories seen bearish, tempering market's
rise
* China seen cutting fuel prices in next few days
(Updates prices, adds China price cut plan)
By Ramthan Hussain
SINGAPORE, Sept 29 (Reuters) - Oil held steady around $67 a
barrel on Tuesday after climbing more than 1 percent a day ago,
boosted by strong equities markets and Iran's missile tests,
but gains were moderated by expected builds in U.S. fuel
stocks.
Asian shares, led by Japan's Nikkei average <>,
followed a U.S. stocks rally spurred by takeover news that
pointed to an easing of risk aversion. Hopes for an economic
recovery offered support to oil, gold and most base metals.
U.S. crude futures for November <CLc1> gained 15 cents to
$66.99 a barrel by 0526 GMT, after closing up 82 cents on
Monday. London Brent <LCOc1> rose 15 cents to $65.69.
"Crude will continue to move according to the stock markets
and inversely to the dollar, which will remain weak," said Tony
Nunan, risk manager at Mitsubishi Corp in Tokyo.
"People have been a bit shaken by the big drop in oil
prices last week -- back-to-back drops -- following a stable
market which has been trading within a $10 range for the past
couple of months," he added.
Prices slid more than $8 in the past two weeks to just
above $65 on Friday, a near two-month low, on doubts over
energy demand given weak U.S. economic data and high crude
inventories.
The recovery this week has taken support from Iran
test-firing a type of missile which a commander said could
reach any regional target. []
But analysts said short-term fundamentals remain weak, with
U.S. crude and oil products stocks set to show sustained
increases in the latest week and as refiners in the world's
largest oil consumer prepare for maintenance ahead of winter.
"The problem is that the oil market is now in a shoulder
period of low demand before seasonal demand picks up in
winter," said Nunan, though he added fund managers will
continue to support the oil and commodities markets as
mid-to-long term fundamentals look firm as the economy
recovers.
U.S. STOCKBUILD SEEN
A Reuters poll showed that U.S. crude stockpiles rose
500,000 barrels in the week to Sept. 25, following an
unexpectedly hefty build the week before.
Distillate inventories, which include heating oil and diesel
fuel, and gasoline supplies were forecast to have risen 1.1
million barrels each, the poll found. []
Weekly U.S. crude inventory data is due later on Tuesday
from the American Petroleum Institute and Wednesday from the
Energy Information Administration.
The recent global crude price fall is prompting China to
plan cuts in retail fuel prices on Wednesday or Thursday, two
sources close to the matter said, by an estimated 3 percent in
its third reduction this year.
This will come after China on Sept. 2 raised gasoline and
diesel prices by 4-5 percent to near records, the fourth hike
this year. []
The head of the International Energy Agency (IEA) said
crude oil demand has yet to recover substantially from the
economic crisis, adding to the picture of weak demand.
[]
This view was reflected by the CEO of Saudi Aramco, who did
not expect to see a swift rebound in global oil demand.
"Oil demand in the United States and Europe remains weak
but the economic crisis will not lead to a permanent reduction
in global consumption," Khalid Al-Falih, the head of Saudi
Arabia's state oil firm, told a U.S. television station.
"It will take time to make up for the millions of barrels
of lost demand that we have experienced," he said.
[]
(Editing by Michael Urquhart)
