* Fed Chairman Bernanke's speech to offer clues on outlook
* U.S. July existing home sales data due later
* OPEC seen keeping supply targets steady at Sept meeting
(Updates with prices, China shares, yen)
By Jennifer Tan
SINGAPORE, Aug 21 (Reuters) - Oil eased below $73 a barrel
on Friday, reversing an earlier surge to a seven-week high, as
optimism over the pace of demand recovery in top energy
consumer, the United States, faded on the back of mixed
economic data.
Industry data on Wednesday showing a surprise 8.4 million
barrel plunge in weekly U.S. crude stocks -- against analysts'
forecasts for a 1.3 million barrel build -- had buoyed
sentiment. []
But oil's surge proved short-lived as consensus grew on
Thursday that this was due to a fall in imports rather than
signs of a genuine rebound in U.S. fuel demand. Upbeat leading
economic indicators in July and weak labour market figures last
week further muddied the outlook.
The market will scour Federal Reserve Chairman Ben
Bernanke's speech before the Federal Reserve Bank of Kansas
City Economic Symposium later in the day for more clues on the
health of the world's largest economy.
By 0525 GMT, the new front month contract for October
delivery <CLc1> was down 56 cents at $72.35 a barrel, off a
seven-week high of $73.24 earlier. It had settled 92 cents
lower at $72.91 the previous day. London Brent crude for
October <LCOc1> was down 44 cents at $72.89.
Oil is on track for a 7.3 percent gain this week.
"Wednesday's inventory report was definitely positive for
the market, but the data is volatile, and you need to see a
trend forming, rather than a one-off decline, before it gets
fully priced into the market," said Ben Westmore, commodities
analyst with the National Australia Bank.
"Although sentiment is positive, it's very shaky, as
fundamentals are still weak. You will see more volatility until
the fundamentals correct," he said, adding that crude was
likely to trade in a range of $70-$75 next week.
So far, U.S. economic signals have been mixed. The index of
leading economic indicators rose for a fourth month in July,
suggesting the recession was abating, but data showing the
number of U.S. workers filing new claims for jobless benefits
unexpectedly rose last week, highlighting the fragile state of
the recovery. [] []
As yet, there are few signs of recovering U.S. fuel demand.
Freight traffic across North America fell 17.9 percent in the
week ended Aug. 15 from the same 2008 week, a trade group said
on Thursday in a weekly report. []
Key policymakers are gathering in Jackson Hole, Wyoming,
this week to mull how to prevent the crisis from recurring.
Bernanke's speech at 1400 GMT could shed more light on the U.S.
economy's rebound from its worst recession in 70 years.
[]
The National Association of Realtors will release existing
home sales for July at 1400 GMT. Economists forecast a total of
5.00 million annualised units versus 4.89 million in June.
Apart from economic data, traders will also take cues from
the direction of currency and equity markets.
U.S. stocks rose for a third straight session on Thursday
with financial shares leading gains after U.S. manufacturing
data and a rebound in Chinese stocks reassured investors.
China equities, viewed by investors as a weathervane of
risk sentiment, were flat to higher on Friday, after surging
4.5 percent on Thursday on technical buying, following the
index's 20 percent fall in the two weeks to Wednesday's close.
The yen jumped to a one-month high against the dollar, as
traders fretted that Chinese shares could take a hit following
a report on Chinese measures to tighten banks' capital
rules.[]
On the supply front, increased oil output to a year-high
from OPEC president Angola, flouting agreed limits, has stacked
the odds against any change when the producer group meets next
month.
Without a sharp slide in crude prices, OPEC is likely to
leave its output targets unchanged when it meets on Sept. 9,
most OPEC delegates and analysts said. []
