* International Energy Agency lowers 2010 demand estimate
* EIA data shows large U.S. crude stock rise
* U.S. Fed to extend Treasury purchase program through Oct
(Updates prices, adds details on Fed decision)
By Matthew Robinson
NEW YORK, Aug 12 (Reuters) - Oil rose on Wednesday as stock
market gains raised optimism about the economy, offsetting
concerns about rising inventories and weak demand in top
consumer the United States.
U.S. crude <CLc1> settled up 71 cents at $70.16 a barrel.
London Brent crude <LCOc1> rose 43 cents to settle at $72.89 a
barrel.
The gains came as global stock markets posted a broad
rally, led by technology and home-building shares after
positive outlooks from semiconductor product manufacturer
Applied Materials Inc and luxury home builder Toll Brothers
Inc. []
"It's pretty clear that the fundamental picture remains
bearish, but it remains to be seen when crude prices will react
accordingly, since they have continued to react to (a rise in
the) S&P stocks and the weakening dollar," Addison Armstrong,
director of market research at Tradition Energy, said.
Oil trimmed gains after the U.S. Federal Reserve in its
policy statement said the U.S. economy is leveling out and that
it was extending purchases of long-term U.S. Treasury debt to
the end of October. [] The dollar rose against the
yen following the Fed statement. []
Traders were also eyeing reports from the National
Hurricane Center that the Atlantic could get its first named
storm of the year as a tropical depression strengthens on a
track toward the U.S. Virgin Islands. []
Tropical storms and hurricanes can disrupt the operations
of offshore oil platforms and coastal refineries.
Oil's strength came despite a report from the U.S. Energy
Information Administration showing U.S. crude oil inventories
rose 2.5 million barrels in the week to Aug. 7, well over
analysts' expectations for a 700,000 barrel build.
The build came as U.S. refiners cut back on runs with the
recession keeping total product demand below year-ago levels.
Despite some positive economic signs, the International
Energy Agency (IEA) forecast global oil demand growth will be
lower in 2010 than previously expected, with little evidence a
recovery is under way yet. []
The Paris-based agency, adviser to 28 industrialized
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.
"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."
(Reporting by Matthew Robinson, Robert Gibbons, Richard
Valdmanis and Gene Ramos in New York City; David Sheppard in
London; Maryelle Demongeot in Singapore; Editing by Jim
Marshall)
