* U.S. crude inventories fall, API says
* Market awaits EIA U.S. fuel stock report at 1430 GMT
* EIA raises 2010 world oil demand forecast
(Updates prices)
By David Sheppard
LONDON, Oct 7 (Reuters) - Oil prices rose for the third
straight day on Wednesday, to about $71 a barrel, after an
industry report showed a drawdown in U.S. crude inventories and
gave support to the view that demand was recovering.
U.S. crude for November delivery <CLc1> rose 10 cents to
$70.98 a barrel by 1346 GMT, adding to Tuesday's gains of 47
cents. London Brent crude <LCOc1> rose 22 cents to $68.78.
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. [] []
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.
"Over the last two weeks, the largest pricing action has
been on the release of the EIA data rather than on exogenous
data and the same is likely today," said Olivier Jakob, managing
director of consultants Petromatrix in Zug, Switzerland.
The EIA also raised its global oil demand estimate by
170,000 barrels a day for the fourth quarter on Tuesday and said
it expected consumption to rise by 1.1 million bpd next year,
versus earlier expectations of a 910,000 bpd rise.
[]
EQUITIES SUPPORT FOR NOW
The second day of gains for Asian shares, on growing
confidence that a global economic recovery is underway, helped
to support oil prices, though gains were kept in check by a dip
in European and U.S. equities.
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 dollar has also supported commodities priced
in the greenback in recent days as they become cheaper for
holders of other currencies. []
The dollar was slightly firmer on Wednesday, but gold <XAU=>
jumped to another fresh record high of $1,408.20 an ounce.
(Additional reporting by Fayen Wong in Perth; Editing by
Anthony Barker)
