(Adds U.S. GDP numbers, 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 the top energy
consumer.
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. []
But an anticipated rise in U.S. crude oil stocks in
government data due on Wednesday could pressure prices.
U.S. crude <CLc1> rose 48 cents to $92.12 a barrel by 1427
GMT. London Brent crude <LCOc1> was up 34 cents to $92.34 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. gross domestic product grew at a weaker-than-expected
0.6 percent annual rate in the fourth quarter and for 2007 as a
whole was up just 2.2 percent, the slowest growth in the
country's annual GDP since 2002.
ROBUST FUNDAMENTALS
Oil hit a record of $100.09 a barrel on Jan. 3 partly on the
back of long-term supply concerns, 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.
But 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 at 1530 GMT was 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 the 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 Singapore, editing by
Anthony Barker)
