* Oil recovers from falls on bearish API crude stocks data
* Upbeat economic data seen largely factored into oil
prices
* Oil above $70 oil deemed strong on current fundamentals
(Updates prices, adds Venezuela, Iran)
By Ramthan Hussain
SINGAPORE, Aug 26 (Reuters) - Oil inched up above $72 on
Wednesday after sliding 3 percent from its highest since last
October a day ago, hit by industry figures showing a hefty rise
in U.S. crude stocks and overshadowing upbeat economic data.
Investors viewed prices touching 10-month highs near $75 on
Tuesday, capping oil's jump of 65 percent this year, as a good
reason to take profits, but a rebound in Asian shares lifted
sentiment.
U.S. crude for October <CLc1> gained 16 cents to $72.21 a
barrel by 0627 GMT, after falling $2.32 on Tuesday, for its
sharpest percentage drop since Aug. 14.
Brent crude <LCOc1> rose 12 cents to $71.94 a barrel after
losing $2.44 the previous day.
"A lot of people are expecting a build in crude stocks
because last week's draw was large," said Tony Nunan, risk
manager at Tokyo-based Mitsubishi Corp.
"People are holding stocks offshore and sooner or later
these would show in crude stocks in the U.S."
American Petroleum Institute (API) data showed an
unexpected 4.3 million-barrel build in U.S. crude stocks last
week, confounding analysts' expectations for a
1.1-million-barrel fall, and coming after the
8.4-million-barrel drop the week before. []
Gasoline stocks fell 1.8 million barrels, the API said,
more than the 1 million-barrel drop predicted in the Reuters
poll, while distillates declined 146,000 barrels, versus
forecasts for a 300,000-barrel rise.
Nunan noted that while the figures from industry body API
have occasionally diverged from those of the government Energy
Information Agency (EIA), due out at 1430 GMT on Wednesday, the
two have been consistent for the previous two weeks.
HIGH GLOBAL OIL STOCKS
As crude oil trimmed its losses and volatile Chinese shares
<> rebounded, the yen and U.S. dollar surrendered early
gains, helping higher-yielding and commodity-linked currencies,
such as the Australian and Canadian dollar, back from the day's
lows.
Oil had surged in earlier U.S. trade after reports showed
increased consumer confidence and higher home prices in the
world's top energy user, adding to a slew of encouraging
economic indicators, and Wall Street's jump to the highest
levels since October's plunge [].
"The economic data is important, but a lot of the positive
economic figures had been built into the prices," said Nunan.
"$74 is a strong crude price," he said, adding that the
market was already at levels most people were expecting for the
end of the year, by when the world is expected to be seeing
real economic growth.
Venezuela also asserted that global oil stocks were too
high, and that OPEC is not expected to raise output at its
September meeting.
Oil Minister Rafael Ramirez said oil could reach an average
of $70 a barrel by year-end if "current conditions hold", and
could go as high as an average $75 in the last quarter.
"Inventories have declined but they remain above average. We
need for them to come down to the average levels," Ramirez
added. []
Another OPEC member, Iran, said oil demand was set to
increase next year after this year's decline.
"Considering the relative recovery of the global economy, it
is expected that oil demand in the year 2010 will be increased
between 500,000 and 1 million barrels," the Mehr News Agency
quoted its OPEC governor Mohammad Ali Khatibi as saying.
(Editing by Clarence Fernandez)
