* U.S. crude stocks at Cushing near record levels - API
* For a short-term technical outlook, click: []
* Coming Up: EIA inventory report; 1430 GMT
(Recasts with news of larger Greece rescue package)
By David Sheppard
LONDON, April 28 (Reuters) - Oil reversed early losses on
Wednesday to climb towards $83 a barrel on news Greece will soon
receive extra help in servicing its debts, the day after Athens
credit rating was cut to junk.
At one stage on Wednesday, crude oil losses for the week
totalled almost 5 percent on the back of mounting crude supplies
in the United States and fears a possible debt default in Greece
could derail the recovery.
But news a larger joint eurozone and International Monetary
Fund aid package for Greece was imminent saw prices reverse.
[]
U.S. crude for June delivery <CLc1> fell to a low of
$81.29, before paring losses to trade up 29 cents at $82.73 by
1336 GMT. Prices are down by more than $2 so far this week.
London Brent for June delivery <LCOc1> was down 16 cents at
$85.62 a barrel.
"It's likely that the only thing that will be easy to
predict in the oil market today will be volatility," said MF
Global analyst Tom Pawlicki.
"The negative side (is) focusing on yesterday's break of the
50-day moving average, ongoing worries about Greek debt, and an
increased likelihood of position limits and financial
regulation. The positive side will cling to the belief that
investment can be maintained and save the market from falling."
In the past two days, oil prices have twice fallen below the
50-day moving average, a key technical indicator that often
proves a battleground for optimists and pessimists in the
market. The 50-day moving average is currently at $82.10.
The severity of the sovereign debt crisis saw one of the
most common measurements of market volatility, the Chicago Board
Options Exchange Volatility Index <.VIX> or 'fear index,' jump
on Tuesday to its highest level since the immediate aftermath of
the Lehman Brother's collapse in late 2008.
European shares fell to a seven-week low on Wednesday while
the euro hit a one year-low against the dollar before bouncing
to trade higher on the day.
Oil and other dollar-denominated commodities tend to move in
the opposite direction to the greenback, as a weaker dollar
makes them cheaper for other currency holders and vice versa.
The euro rose to the day high against the dollar on optimism
Greece will soon receive assistance with servicing its debts.
RISING U.S. CRUDE STOCKS
"Market sentiment remains fragile and there is a possibility
that if we have more adverse economic news, we could see prices
decline further," said David Moore, an analyst at the
Commonwealth Bank of Australia.
"U.S. oil demand is weak. Over the course of this year we
may see inventories decrease a bit, but overall they will
probably remain relatively high."
Crude inventories in the United States rose 5.3 million
barrels in the week ended April 23, the American Petroleum
Institute (API) said on Tuesday. []
The gain was more than five times the amount forecast by a
Reuters poll of oil analysts, aided by soaring stockpiles at the
delivery point of the main U.S. crude futures contract.
Stocks at Cushing, Oklahoma rose by 401,000 barrels last
week to 34.6 million barrels, close to the record high 35.4
million barrels reported by the industry-funded API on Jan. 1.
The oil glut in the U.S. Midwest is creating distortions in
oil futures markets. The front-month U.S. crude contract, which
usually trades at a premium to European benchmark ICE Brent
futures, was almost $3 lower.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of Brent futures against U.S. crude, click on:
http://link.reuters.com/hyf69j and for story click:
[]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Traders awaited government statistics on inventories from
the U.S. Energy Information Administration on Wednesday at 1430
GMT. Crude, gasoline and distillate stocks are all expected to
rise. []
(Additional reporting by Gene Ramos in New York and Alejandro
Barbajosa in Singapore; editing by James Jukwey)
