* U.S. economic growth slows, but not as sharply as feared
* Bernanke says economic recovery softer than expected
* Stock markets dip, then bounce higher on Bernanke talk
* Coming up: CFTC positions data at 3:30 p.m. EDT Friday
(Recasts, updates prices, market activity, new byline,
changes dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Aug 27 (Reuters) - Oil rose in volatile trading
on Friday, having seesawed with Wall Street as markets assessed
second-quarter U.S. economic growth data and cautionary remarks
from Federal Reserve Chairman Ben Bernanke.
Bernanke said the U.S. recovery has softened more than
expected. His remarks came after the U.S. Commerce Department
revised its second-quarter growth estimate downward, although
by less than expected. [] []
The U.S. dollar index <.DXY> was weaker and the greenback
was lower versus the euro <EUR=> in equally volatile trading.
The dollar's weakness helped support oil prices.
U.S. crude for October delivery <CLc1> rose 88 cents, or
1.2 percent to $74.24 a barrel by 12:11 p.m. EDT (1611 GMT),
having traded from $72.04 to $74.36.
U.S. crude prices on Thursday and Friday were trying to
consolidate a recovery from Wednesday's $70.76 intraday low,
which was weakest front-month crude price since the $70.75 low
struck 11 weeks before on June 8.
Only a settlement above the Aug. 20 close at $73.46 a
barrel will allow U.S. front-month crude futures to avoid a
third straight weekly loss.
On Friday October Brent crude <LCOc1> rose $1.02 to $76.04
a barrel.
"After the initial disappointment over the remarks of Fed
chief Bernanke, it looks like there isn't much to be worked up
about on what he has said," Gene McGillian, analyst at
Tradition Energy in Stamford, Connecticut.
"At this point, crude futures are just tagging along with
the stock market, which has also snapped back after falling on
Bernanke's statement."
U.S. stocks extended gains in choppy action, led higher by
materials and energy shares and helped by Bernanke's statements
that the Fed was ready to take further steps to help the
recovery. []
Analysts said any further steps by the Fed to spur the
stumbling economy would be supportive for riskier assets such
as equities and oil.
"You need to distinguish how the market reacts on the
release of the news versus more favorable prospects for risk
appetite with another round of quantitative easing," said Harry
Tchilinguirian, oil analyst at BNP Paribas.
Bloated U.S. inventories have depressed prices of benchmark
West Texas Intermediate crude relative to North Sea Brent. The
premium of front-month Brent futures over front-month WTI
jumped over $2.00 on Friday for the first time since May.
[]
Oil markets were eyeing a string of tempests in the
Atlantic, lending at least some support to crude prices though
the storms were so far no threat to the energy infrastructure
in the Gulf of Mexico.
The U.S. National Hurricane Center was monitoring three
tropical systems in the Atlantic Ocean, including Hurricane
Danielle and Tropical Storm though computer models were showing
all three steering missing the Gulf of Mexico. []
(Additional reporting by Gene Ramos in New York, Joe Brock in
London, Alejandro Barbajosa in Singapore; Editing by David
Gregorio)
