* API-U.S. crude stocks post bigger-than-expected increase
* NYMEX makes biggest gain since September on Tuesday
* Reuters FOREX poll forecasts more yen, euro volatility
(Updates price, adds comment)
By Chris Baldwin
LONDON, Feb 3 (Reuters) - Oil rose above $77 a barrel on
Wednesday ahead of key inventory data out of the world's largest
energy consumer, the United States.
U.S. crude for March delivery <CLc1> touched $78.04 a
barrel, the highest since Jan. 21, and was trading up 23 cents
at $77.46 at 1501 GMT.
London ICE Brent crude for March <LCOc1> rose 45 cents to
$76.51.
"After a long decline last month and a sharp rebound
yesterday, it might be that we have reached a U-turn if the EIA
data today is not too bearish," JBC Energy analyst David Wech
said.
On Tuesday U.S crude soared 3.8 percent, the biggest gain
for a front-month contract since Sept. 30, as the dollar dipped
on the back of strong corporate earnings reports that boosted
risk appetite and on signs China's oil demand will stay high in
coming months.[]
The U.S. government's Energy Information Administration
(EIA) will release stockpile and demand statistics at 1530 GMT,
and inventories are expected to have edged up on higher imports,
according to a Reuters poll.[]
The dollar rose 0.1 percent to 78.932 against a basket of
major currencies, just below a six-month high of 79.534 touched
earlier this week.<.DXY>
A stronger greenback makes commodities priced in the U.S.
currency more expensive for those holding other currencies.
Volatility in the euro and the yen against the dollar will
probably rise in coming weeks, while sterling will probably be
less volatile, according to the monthly Reuters foreign exchange
poll.[] []
GEOPOLITICAL CONCERNS
On Wednesday Iran, the world's fifth-largest oil exporter,
said it had launched a domestically made satellite-carrier
rocket carrying live animals into low-Earth orbit, a move that
may fan concern about Tehran's nuclear intentions.
[]
On Tuesday Iran made conciliatory remarks over its nuclear
programme, with President Mahmoud Ahmadinejad offering to send
the country's low-enriched uranium in exchange for more highly
enriched fuel for a medical research reactor.[]
Western powers accuse Iran of trying to develop nuclear
weapons under a civilian enrichment programme that Tehran says
will fuel a future network of nuclear power plants that will
free up domestic oil and gas for export.
"We were expecting a tougher stance on Iran in February once
France assumed the rotating presidency of the United Nations
Security Council," said independent oil analyst Olivier Jakob at
Petromatrix.
"There were whispers at the end of last week about a meeting
with an Iranian delegation and a representative of the French
president at Davos, and yesterday's announcement out of Iran
fits in with that time frame."
The United States and Israel have not ruled out military
action if diplomacy fails to resolve the row over Iranian
nuclear enrichment, while, for its part, Tehran has threatened
to hit back at Tel Aviv and U.S. bases in the Gulf if attacked.
HIGHER INVENTORIES
In a report late on Tuesday, the American Petroleum
Institute (API) said U.S. crude stocks jumped by 4.7 million
barrels last week. That compared to an average forecast gain of
200,000-barrel in a Reuters poll.[]
The API said U.S. gasoline stocks fell 1.2 million barrels
and distillate stocks fell by 1 million barrels. []
U.S. gasoline stocks were forecast to have risen by 1.3
million barrels in the week to Jan. 29 and total distillate
stocks, including heating oil and diesel, were projected to have
fallen 1.1 million barrels.
(Editing by Sue Thomas)
