UPDATE 1-Oil steady near $79; U.S. inventories seen mixed

                                
 * U.S. crude inventories seen down 1.8 mln barrels
                                
 * For a short-term technical view, click: [ID:nSGE66Q00X] 
  * Coming Up: API U.S. oil inventory report; 2030 GMT
 (Adds BP set to replace CEO, Taiwan refinery may restart)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, July 27  (Reuters) - Oil steadied near $79 on
Tuesday as forecasts see falling crude inventories and rising
refined product stocks in the United States, continuing a trend
that has helped keep prices in a $10 range for almost two
months.
                                
 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 summer
demand peaks. [EIA/S]
                                
 Over the past seven weeks oil has traded between $70 and
$80 a barrel, as investors trimmed long positions whenever
prices approached the upper end of that range, while they
increased bets for higher prices as it fell towards the bottom,
said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
                                
 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> added 1 cent to
$78.99 a barrel at 0519 GMT, while ICE Brent <LCOc1> shed 1
cent to $77.49.
                                
 "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."
                                
 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.
                                
 U.S. HOUSING, GULF OF MEXICO
                                
 On Monday, oil ended unchanged as stronger U.S. home sales
led to economic optimism [ID:nN23137243], while some oil output
was restored in the Gulf of Mexico after Tropical Storm Bonnie
fizzled out.
                                
 The positive economic data helped lift equities. Asian
stocks rose to their highest in two and a half months on
Tuesday, while the euro inched up towards two-month peaks on
relief over stress tests on European banks. [MKTS/GLOB]
                                
 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. [ID:nEIA001017]
                                
 FORMOSA, BP
                                
 Taiwan's Formosa Petrochemicals <6505.TW> said on Tuesday
it expects part of its refinery complex to restart production
within a week after a massive blaze closed the operation a day
ago. [ID:nTOE66Q03U]
                                
 BP Plc <BP.L><BP.N> is expected to install an American
known for diplomacy as chief executive, replacing Tony Hayward
who has come under fire for his gaffe-prone handling of the
worst oil spill in U.S. history.
                                
 Bob Dudley, the U.S. executive managing BP's response to
the spill in the Gulf of Mexico, is poised to get the top job,
a move that could soften U.S. criticism of the British oil
major, sources close to the company said. [ID:nLDE66P0X9]
 (Editing by Ed Lane)