(Adds Canadian disruption, updates prices)
By Jane Merriman
LONDON, Jan 30 (Reuters) - Oil held near two-week highs on
Wednesday, bolstered by expectations of another cut in U.S.
interest rates to revive economic growth in top consumer the
United States.
The view that OPEC will leave production levels unchanged
when it meets in Vienna later this week was also supportive, as
was a report of production disruption at a major Canadian oil
sands facility.
An anticipated rise in U.S. crude oil stocks in government
data due later on Wednesday could put prices under pressure.
U.S. crude <CLc1> rose 65 cents to $92.29 a barrel by 1320
GMT. London Brent crude <LCOc1> was up 49 cents to $92.49 a
barrel.
The U.S. Federal Reserve is expected to cut interest rates
on Wednesday for the second time in just over a week to help the
U.S. economy cope with a housing slump and credit troubles in
global financial markets.
The severity of the credit market crisis was highlighted
again when Swiss bank UBS <UBSN.VX> reported $4 billion in new
write-downs related to bad mortgage loans. []
"Once the Fed decision is out of the way, most financial and
commodity markets could again come under pressure," said Edward
Meir, analyst at broker MF Global in a research report, citing
uncertainty over the health of the U.S. economy.
U.S. economic data released on Tuesday was mixed, with
stronger-than-expected orders for U.S.-made durable goods in
December countering a record fall in house prices in November.
ROBUST FUNDAMENTALS
Oil hit a record of $100.09 a barrel on Jan. 3, but has
dropped back since then as fears of a U.S. slowdown have
intensified.
Goldman Sachs remains positive on oil's fundamental
supply/demand picture despite concerns over the U.S. economy.
"While concerns over economic growth will likely continue to
create volatile swings in speculative positions and crude oil
prices in the near term, current oil market fundamentals remain
robust and continue to support our $95 a barrel average 2008
price forecast," the bank said in a research note.
Flows of speculative money into oil have been declining in
the past two weeks towards low levels seen last summer during a
sell-off resulting from the turmoil in the U.S. credit markets,
Goldman said.
The U.S. Energy Information Administration's weekly update
of fuel supplies is due later on Wednesday and is forecast to
show a rise in crude stocks for the third week in a row. []
A Reuters poll of analysts ahead of the data forecast a 2.4
million-barrel rise in crude stocks, a 1.9-million-barrel build
in gasoline stockpiles and a 1.7 million-barrel distillate draw.
"Bigger-than-expected builds could potentially hit the (oil
market) bulls with a double whammy," said Meir.
The Organization of the Petroleum Exporting Countries is
expected to leave production levels unchanged when it meets this
week in Vienna, despite calls from the U.S. and other consumers
for the group to open the taps to bring down prices.
Ecuador's oil minister said on Tuesday oil supplies to
global markets were adequate and there was no need for OPEC to
change output at its upcoming meeting. []
U.S. Energy Secretary Sam Bodman reiterated calls for OPEC
to increase output to help rebuild global inventories.
[]
(Additional reporting by Felicia Loo in Singagpore; editing by
James Jukwey)
