* Oil could break four-day losing streak
* International Energy Agency revises demand estimate
* EIA data expected to show higher crude stocks
* Dollar slips versus euro and yen
(Updates prices)
By David Sheppard
LONDON, Aug 12 (Reuters) - Oil reversed early losses on
Wednesday rising towards $71 a barrel on equity markets, after
falling to the lowest in August so far due to concerns about the
strength of demand ahead of weekly U.S. inventory data.
U.S. light crude for September delivery <CLc1> rose $1.39 to
$70.84 a barrel by 1358 GMT, having fallen for the previous four
sessions. U.S. crude hit a near two-week low of $68.84 in early
trade on Wednesday, before rebounding strongly.
London Brent crude <LCOc1> fell 20 cents to $72.26.
Traders said oil prices continue to track the fortunes of
equity markets as they look for positive signs from the wider
economy. Global stock markets were broadly up on Wednesday, but
oil fundamentals have given some cause for concern. []
World oil demand growth will be lower in 2010 than
previously forecast, the International Energy Agency (IEA) said
in its monthly market report on Wednesday, with little evidence
a global recovery is underway yet. []
The Paris-based agency, adviser to 28 industrialised
nations, said global oil demand was now seen recovering by just
1.3 million barrels per day (bpd) in 2010, having fallen by 2.3
million bpd this year as the economic crisis curbed consumption.
World oil demand hit a peak of 86.5 million bpd in 2007.
"Evidence of a bottoming out of the recession is still a bit
patchy. The latest data on industrial production for some of the
larger countries remains negative," David Martin, analyst at the
IEA, told Reuters.
"There is not clear evidence yet we have seen the worst."
U.S. INVENTORIES
Falling demand for oil has seen inventories of crude and oil
products stack up around the world.
Combined with the impact of a tame U.S. summer driving
season, the drawdown in stocks typical of this time of year has
not happened. The IEA said stocks in developed countries stood
at almost 62 days of forward cover at the end of June.
On Tuesday, weekly stocks data from the American Petroleum
Institute (API) showed an unexpected fall of 1.4 million barrels
in crude stocks. []
The U.S. Department of Energy, will release its own weekly
snapshot of U.S. fuel inventories at 1430 GMT.
Data from the DoE and API can diverge widely.
An expanded Reuters poll of analysts on Tuesday showed
expectations of a 700,000-barrel rise in crude stocks, a
1.3-million-barrel decrease in gasoline stocks and a
200,000-barrel drop in distillates stocks.
Traders will also keep a close eye on the two-day U.S.
Federal Reserve meeting that ends later on Wednesday with a
statement expected at about 1815 GMT. []
"The Fed and their statement will be the biggest factor that
will drive the future of oil prices," said Phil Flynn, energy
analyst at PFGBest Research.
The statement from the Federal Reserve could influence the
direction of the dollar, which tends to have an impact on
commodities like oil which are priced in the greenback. []
The dollar was lower ahead of the meeting, making oil
cheaper for holders of other currencies.
(Additional reporting by Maryelle Demongeot in Singapore;
Editing by Sue Thomas)
