* U.S. July crude contract expires on Tuesday
* U.S. crude oil inventories probably fell last week-poll
* Coming up: API inventory data, 4:30 p.m. EDT (2030 GMT)
(Recasts, updates prices, market activity, moves dateline from
LONDON)
By Robert Gibbons
NEW YORK, June 22 (Reuters) - Crude oil futures edged lower
in choppy trading on Tuesday, seesawing with Wall Street in a
cautious market ahead of weekly oil inventory reports and with
the U.S. July crude contract approaching expiration at the end
of the session.
At 12:38 p.m. EDT (1638 GMT), expiring front-month U.S.
July crude <CLc1> was down 16 cents at $77.66 a barrel, having
recovered from an earlier $76.53 low.
U.S. crude for August <CLc2>, which will become the front
month on Wednesday, was down 13 cents at $78.48 a barrel,
having seesawed in tandem with the July contract.
In London, ICE Brent for August <LCOc1> fell 7 cents to
$78.75 a barrel.
"The stability in the stock markets has been supportive for
crude today. Prices were down earlier as people assessing what
effects China's revaluation of the yuan would bring to oil
prices say any impact would not be very significant and would
be gradual," said Andy Lebow, a broker at MF Global in New
York.
"Also supportive for crude is the slightly improving demand
we've been seeing in recent weeks in transport fuels, diesel in
particular," added Lebow.
U.S. stock indexes were mixed after midday on Tuesday.
Trading was choppy and shares were hemmed in by data showing
sales of existing homes fell unexpectedly in May. []
World equities fell on Tuesday and commodities paused amid
expectations that a more flexible Chinese currency might not
result in as much demand growth as initially anticipated.
The dollar rallied for a second straight day against the
euro as new concerns about the funding needs of European banks
offset stronger-than-expected German economic data. The yuan
declined against the dollar. []
The U.S. Federal Reserve's Federal Open Market Committee
two-day meeting started on Tuesday and financial markets were
waiting for indications that low interest rates would remain
intact.
U.S. INVENTORIES
A Reuters poll of oil analysts on Monday yielded a forecast
for U.S. crude stocks to have fallen 1.3 million barrels last
week. Gasoline stockpiles were expected to be down 100,000
barrels and distillate inventories up 1.3 million barrels.
[]
The industry group American Petroleum Institute was to
issue its weekly inventory report at 4:30 p.m. EDT (2030 GMT)
on Tuesday. The U.S. Energy Information Administration's report
was due on Wednesday at 10:30 a.m. EDT (1430 GMT).
Front-month U.S. crude touched an intraday high near $79 a
barrel on Monday, but pulled back as charts indicated technical
resistance. Although prices have recovered about 20 percent
from a trough below $65 on May 20, they are still about $9
lower than the 19-month high of $87.15 hit on May 3. (Graphic
http://r.reuters.com/dyc53m)
U.S. crude's failure to breach strong resistance at $78.40
-- the 61.8 percent Fibonacci retracement on the move from
$87.15 to $64.24 -- brings a new target of $76.50 into play,
according to a Reuters market analyst. []
Monday's crude rally came after China's central bank
allowed the yuan to rise by nearly 0.5 percent against the
dollar in the spot market, the daily limit, following a pledge
at the weekend to make the currency more flexible.
That led to a commodities rally on Monday amid prospects
for increased buying power from China.
A Reuters poll of analysts showed Chinese authorities were
expected to allow only up to a 2.4 percent rise for the yuan
against the dollar by the end of 2010, keeping its word that it
will keep the currency basically stable. []
China is the world's second-biggest oil consumer after the
United States, accounting for about 10 percent of global use.
But it is also the world's fifth-largest producer and in May it
pumped more oil domestically than it bought from abroad.
(Graphic http://r.reuters.com/bad53m)
(Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Alejandro Barbados in Singapore; Editing
by Walter Bagley)
