(Adds U.S. inventory data, analyst comment)
By Jane Merriman
LONDON, Jan 30 (Reuters) - Oil gave up some of its gains on
Wednesday after a larger-than-expected rise in crude oil and
gasoline stocks last week in top energy consumer the United
States.
Prices had reached two-week highs earlier, supported by
expectations of another cut in U.S. interest rates to revive
U.S. economic growth.
The view that OPEC will leave production levels unchanged
when it meets in Vienna later this week also underpinned the
market as well as a report of production disruption at a major
Canadian oil sands facility. []
U.S. crude <CLc1> rose 10 cents to $91.74 a barrel by 1634
GMT. London Brent crude <LCOc1> was down 5 cents at $91.95 a
barrel.
"The EIA report was bearish, particularly with the build in
gasoline as it is a sign that consumers are cutting down on
purchases," said Phil Flynn, analyst at Alaron Trading.
"That is a sign that consumers are feeling the pain of a
slowing economy."
U.S. crude oil stocks rose by 3.6 million barrels last week,
according to the U.S. Energy Information Administration. []
This was more than the 2.4 million barrel rise predicted by
analysts.
Gasoline stocks were up by 3.6 million barrels, more than
the 1.9 million barrel increase analysts had forecast.
Distillate stocks fell by 1.5 million barrels, which compared
with forecasts for a drop of 1.7 million.
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.
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.
"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.
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 POSITIVE
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 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.
OPEC does not need to change its output when it meets on
Friday, the head of Libya's OPEC delegation Shokri Ghanem told
Reuters. []
U.S. Energy Secretary Sam Bodman has reiterated calls for
OPEC to increase output to help rebuild global inventories.
[]
(Additional reporting by Felicia Loo in Singapore, editing by
Anthony Barker)
