* U.S. crude stocks fell more than expected last week-API
* Coming Up: EIA inventory report 1500 GMT
* For a technical view, click: []
(Recasts, updates prices)
By David Sheppard
LONDON, June 3 (Reuters) - Oil prices pared early gains of
nearly 2 percent on Thursday to pull back to near $73 a barrel,
as traders waited to see if U.S. government data would confirm
an industry report showing falling crude stockpiles.
U.S. crude prices for July <CLc1> rose as high as $74.40 in
early trade, before dipping to trade up just 31 cents at $73.17
a barrel by 1111 GMT. ICE Brent <LCOc1> rose 37 cents to $74.12
a barrel by the same time.
Prices jumped in early trade following a report from the
American Petroleum Institute (API) showing a much larger than
expected drop in U.S. crude stockpiles last week. []
But prices pulled back as traders turned cautious, waiting
to see if the 1.4 million barrel drop reported by the API would
be confirmed by the weekly data from the U.S. Energy Information
Administration data at 1500 GMT. Analysts polled by Reuters have
predicted a far smaller 100,000 barrel fall. []
Optimism after strong U.S. housing data and double-digit
auto sales growth also extended into Thursday, boosting equities
in Asia and Europe and pressuring the U.S. dollar.
"We've seen oil prices taking their cues to a large degree
from equity market movements," said Toby Hassall, chief
commodities analyst at CWA Global Markets Pty Ltd.
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For a correlation graphic of oil, equities and the euro:
http://graphics.thomsonreuters.com/gfx/AB_20100306145731.jpg
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"If this spike in risk aversion is reversing, you might
expect the U.S. dollar to give up some recent gains," Hassal
said. "That improvement in risk appetite might feed into oil
prices, and the typical seasonal decline in stockpiles in the
U.S. would also be supportive."
The API also said gasoline stocks in the United States fell
by 962,000 barrels last week, compared with forecasts for a
500,000 barrel decline.
Stocks of distillates, which include diesel and heating oil,
rose by 852,000 barrels, above expectations for a 100,000 rise.
VOLATILE WEEK
Concern about a slowdown in China's economy weighed on oil
prices earlier this week, hitting sentiment already battered by
Europe's debt crisis.
But U.S. pending home sales in April rose more than expected
to a six-month high, the third consecutive month of gains,
fuelling optimism that an economic recovery is gaining steam in
the world's top economy. []
Oil prices have traded in a range between $71.64 and $75.33
since Monday, torn between evidence that the world's biggest
oil-consuming nations are posting steady demand growth and
speculation that consumption will be hurt by a stagnant European
economy.
"Crude demand will ease slightly ahead of the seasonal
pick-up in the second half of this year, but we remain confident
it will still grow strongly in 2010," VTB Capital analyst Andrey
Kryuchenkov said.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Sue Thomas)
