* Oil firms above $71 ahead of EIA inventory data
* Traders await EIA data for direction, trading cautious
* Higher European equities, weak dollar support
(Updates prices, adds stock market, dollar)
By Joe Brock
LONDON, Aug 5 (Reuters) - Oil rose towards $72 a barrel on
Wednesday, ahead of key inventory data expected to show a fall
in U.S. crude stocks and supported by higher European equities
and a weaker U.S. dollar.
U.S. light, sweet crude <CLc1> rose 24 cents to $71.66 a
barrel by 1155 GMT, adding to gains that helped oil rise 13
percent since late last week.
London Brent crude <LCOc1> gained 25 cents to $74.53 a
barrel.
Oil was supported by cautious optimism over global economic
recovery after solid European banking results, which lifted
European equity markets and pressured the U.S. dollar.
Dollar weakness can make commodities like oil denominated in
the currency more attractive to investors.
Expectations that a turnaround in the global economy could
lift sagging oil demand has helped send crude up from lows below
$33 a barrel in December, with energy traders keeping an eye on
equities markets for signs of an economic rebound.
Later, a flurry of key U.S. economic data reports on the
labour market, factory orders and the services sector should add
direction to stock markets both sides of the Atlantic.
Oil market focus will be on U.S. crude and product stocks.
INVENTORY DATA
The U.S. Energy Information Administration (EIA) is due to
release inventory data at 1430 GMT on Wednesday with the market
eager for further guidance after Tuesday's numbers from the
American Petroleum Institute.
The API data showed crude stocks fell 1.5 million barrels
last week but gasoline stocks rose by a further 2.1 million
barrels, during what is traditionally the peak fuel usage season
in the United States. []
According to EIA data last week, gasoline stocks are up 5.3
million barrels from a year ago. []
A Reuters poll of analysts forecast an 800,000-barrel build
in crude stocks in the week to July 31. The poll also predicted
a 1.2-million barrel rise in distillate stocks and a 1.0-million
barrel drop in gasoline stocks. []
"I think the API statistics were weak. A slight drop in
crude doesn't mean it is supportive. If you look at gasoline
data it is very weak considering the time of year. Traders will
be waiting for confirmation from DOE (EIA) later," said
Christophe Barret, global oil analyst at Calyon.
Investors were awaiting news from a meeting between trade
representatives and Britain's financial powers, the UK Financial
Services Authority (FSA) and the UK Treasury, which comes before
a third Commodity Futures Trading Commission (CFTC) hearing in
Washington over how to rein in speculation. []
The UK meeting will discuss market transparency and
efficiency, according to the FSA invitation to oil market
participants, a copy of which has been seen by Reuters.
Energy traders also were watching an area of thunderstorms
in the Atlantic Ocean several hundred miles southwest of the
Cape Verde Islands associated with a tropical wave. The U.S.
National Hurricane Center said it had less than a 30 percent
chance of becoming a tropical storm. []
(Editing by Sue Thomas)
