(Refiles to drop extraneous word from headline)
* U.S. crude inventories seen down 1.8 mln barrels
* For a short-term technical view, click: []
* Coming Up: API U.S. oil inventory report; 2030 GMT
By Alejandro Barbajosa
SINGAPORE, July 27 (Reuters) - Oil was steady near $79 per
barrel on Tuesday as forecasts indicated a trend of falling
crude inventories and rising refined product stockpiles in the
United States would continue.
U.S. crude inventories probably fell 1.8 million barrels
last week, a Reuters survey showed, while supplies of
distillate fuel including diesel may have climbed for the ninth
consecutive week and gasoline for the fifth, even as demand
peaks with summer. []
Over the past seven weeks, investors have trimmed long
positions as oil approached $80 a barrel, while they have
increased bets for higher prices as it fell towards $70, said
Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
"Under current market conditions, people are thinking that
oil would be overvalued at $80," Emori said. "Evidence of much
stronger demand would be quite a positive indicator for the
crude market. Once oil hits $80, it can go up to $85 very
quickly on short-covering."
U.S. crude touched $79.60 on Friday, the highest price
since early May, and has hovered around $79 for the past two
days. On Tuesday, the September contract <CLc1> shed 2 cents to
$78.96 a barrel at 0307 GMT, while ICE Brent <LCOc1> added 6
cents to $77.56.
On Monday, oil ended unchanged as stronger U.S. home sales
led to economic optimism, while some oil output was restored in
the Gulf of Mexico after Tropical Storm Bonnie fizzled out.
As much as 826,000 barrels a day of U.S. production was
shut in by Saturday, according to government estimates. By
Monday, companies had restored about half of the idled output
and operations were returning to normal. []
Government data showed U.S. sales of new homes rebounded
strongly in June from May's record low, driving the number of
houses on the market to the lowest level in more than four
decades. []
The positive economic data helped lift oil and equities.
The Nikkei benchmark inched higher on Tuesday with support from
robust earnings at home and the pickup in U.S. new home sales,
after gains on the Wall Street that were also aided by an
upbeat outlook from FedEx Corp <FDX.N>.[][]
Industry group the American Petroleum Institute will
publish data on U.S. inventories at 2030 GMT on Tuesday,
followed by government statistics from the Energy Information
Administration on Wednesday at 1430 GMT.
For distillates the average forecast was for an increase of
1.6 million barrels in the week to July 23, while gasoline
stocks probably gained 600,000 barrels, the Reuters poll
showed.
(Editing by Himani Sarkar)
