* Stock markets, supply reports to set direction for prices
* Coming Up: API U.S. inventory report; 2030 GMT
* For a technical view, click: []
By Alejandro Barbajosa
SINGAPORE, July 7 (Reuters) - Crude prices rose as much as
half a percent on Wednesday, pulling away from one-month lows
struck in the previous session on forecasts of a second weekly
fall in U.S. inventories.
Prices have tracked volatile equities over the past two
days, paring gains on Tuesday after a report from the Institute
for Suply Management (ISM) showing a slowdown in the U.S.
service sector weighed on sentiment.
Japan's Nikkei average inched down 0.2 percent on Wednesday
as shares of exporters gave back some gains, but the index
remained above a 7-month low hit this week. The dollar edged
higher against a basket of currencies [], as worries over
the possibility of a double-dip recession persisted.
U.S. crude for August <CLc1> advanced as much as 40 cents
to $72.38 a barrel and was up 20 cents at $72.18 by 0228 GMT,
after touching $71.09 on Tuesday, marking its lowest intraday
price since June 8, and peaking at $73.86. ICE Brent for August
<LCOc1> rose 22 cents to $71.67.
"Yesterday's non-manufacturing data fell more than
expected, so investors have a wait-and-see approach," said
Serene Lim, a Singapore-based oil analyst at ANZ.
"Oil is still going to be trading sideways and a bit
choppy. The market is pricing in a drop in crude inventories,
but if inventories fall less than expected we might see prices
falling."
U.S. crude stockpiles probably fell 2.6 million barrels in
the week to July 2, a Reuters survey showed on Tuesday, as
imports may have dropped for a second straight week.
Gasoline inventories were forecast down 300,000 barrels on
average, following a surprise modest build in the prior week,
the poll showed, while supplies of distillates, including
heating oil and diesel, likely posted their sixth straight
weekly increase, adding 1.5 million barrels. []
The American Petroleum Institute will publish weekly
inventory data on Wednesday at 2030 GMT, followed by government
statistics from the Energy Information Administration (EIA) on
Thursday at 1600 GMT. Both reports come a day later than usual
because of the independence day holiday on July 5.
"Investors are still very concerned about the economic
outlook," ANZ's Lim said, adding prices may test the $68-$70
range before the end of the month.
"I don't think oil could decouple from the stock markets.
It's quite highly correlated these days. Whatever is going to
happen in the stock market will have some impact on crude
prices."
A weather system over Mexico's Yucatan peninsula and the
eastern Gulf of Mexico had a 30 percent chance of developing
during the next two days into a tropical cyclone, a category
that includes tropical storms and hurricanes, the U.S. National
Hurricane Center said late on Monday.
The system's course so far has been similar to that of
Hurricane Alex, which in late June forced Mexican oil terminals
to shut and U.S. producers to curb output.
Drilling of a relief well to halt the BP <BP.L><BP.N> oil
spill in the Gulf of Mexico is a week ahead of schedule, the
U.S. official overseeing the response to the disaster said on
Tuesday. []
Global oil output will rise faster than first expected in
2010 with a strong rebound in prices from the depths of the
crisis ensuring growing demand will not stretch supplies for at
least another year, a Reuters poll of 10 top oil-tracking
analysts and organisations found on Tuesday. []
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Click here for table of poll results []
For a PDF of poll results, click:
http://graphics.thomsonreuters.com/ce/OILPOLL.pdf
For a graphic of historical demand, click:
http://graphics.thomsonreuters.com/10/OIL_RTRPL0710.gif
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(Editing by Clarence Fernandez)
