* U.S. crude inventories fall, API says
* Dollar on back foot, commodity currencies shine
* U.S. EIA raises 2010 world oil demand forecast
(Updates prices, detail throughout)
By David Sheppard
LONDON, Oct 7 (Reuters) - Oil prices rose for the third
straight day on Wednesday, edging above $71 a barrel after an
industry report showed a drawdown in U.S. crude inventories,
boosting the view demand is recovering.
U.S. crude for November delivery <CLc1> rose 26 cents to
$71.14 a barrel by 0937 GMT, adding to Tuesday's gains of 47
cents. London Brent crude <LCOc1> rose 32 cents to $68.88.
Oil's gains followed a report by the American Petroleum
Institute saying crude stocks fell 254,000 barrels in the week
to Oct. 2, defying forecasts in a Reuters poll of analysts for a
2.2-million-barrel increase. [] []
Distillate stocks -- including diesel and heating oil --
fell 2.9 million barrels, countering expectations for a
300,000-barrel build, while gasoline stocks rose 544,000
barrels, against estimates for a 1.0-million-barrel increase.
The API report is seen as a precursor to the more
authoritative data issued by the U.S. Energy Information
Administration (EIA), which will be released at 10:30 a.m. EDT
(1430 GMT) on Wednesday.
The EIA also raised its global oil demand estimate by
170,000 barrels a day for the fourth quarter and said it
expected consumption to rise by 1.1 million bpd next year,
versus earlier expectations of a 910,000 bpd rise.
[]
The second day of gains for Asian and European shares, on
growing confidence that a global economic recovery is underway,
gave oil prices an extra lift.
Oil has rebounded from an 11-week low of around $66 in late
September back above the $70 level, but some analysts caution it
could slip back in the near term.
"Oil looks like it's on shaky ground as we approach the U.S.
third quarter (corporate) reporting season. A lot of near term
price gains have been won off a rebounding equity market," said
Mark Pervan, a commodities analyst at the Australia & New
Zealand Bank.
"I suspect the third-quarter reporting card will struggle to
match the impressive second-quarter results, which were mainly
driven by one-off aggressive cost cutting."
After having jumped by around 40 percent in the second
quarter, oil prices have squeezed out a gain of only 1 percent
in the last quarter, trading in a band of between $65-$75.
While the global economy is healing from the financial
crisis, the recovery, along with energy demand, remains fragile.
A U.S. Federal Reserve official said on Tuesday that while
the world's largest economy was clearly rebounding, it was too
soon to begin to withdraw the Federal Reserve's massive support.
[]
Weakness in the U.S. dollar is also supporting commodities
priced in the greenback as they become cheaper for holders of
other currencies. []
Gold <XAU=> has risen to a series of record highs over the
past two days, with the precious metal touching $1,048.20 an
ounce on Wednesday.
The Australian dollar has been buoyed to 14-month highs due
to higher interest rates and stronger commodity prices.
[]
(Additional reporting by Fayen Wong in Perth; Editing by
Anthony Barker)
