* Oil steady as eyes on possible drop in U.S. crude stocks
* Dollar movement a factor ahead of Fed rate decision
* Kuwait clarifies to boost capacity, not output next year
(Updates prices, adds comments from UAE, Kuwait)
By Fayen Wong
PERTH, June 25 (Reuters) - Oil hovered within sight of last
week's record high on Wednesday, as traders eyed forecasts of a
drawdown in U.S. crude stocks and dollar movements ahead of the
Federal Reserve interest rate decision.
U.S. light crude for August delivery <CLc1> rose 10 cents
to $137.10 a barrel by 0624 GMT. It rose as high as $138.75 on
Tuesday, close to the record $139.89 hit on June 16.
London Brent crude <LCOc1> gained 17 cents to $136.63.
"There is the U.S. inventory data and the U.S. Federal
Reserve meeting later today. Those two will be on top of the
oil market's agenda," said David Moore, a commodities analyst
at the Commonwealth Bank of Australia in Sydney.
U.S. crude oil inventories probably fell by 1.4 million
barrels last week, extending a decline for the sixth time in a
row as refinery utilisation rose, a Reuters poll of analysts
showed. []
The poll also called for a 200,000-barrel drop in gasoline
supplies and a 1.9 million-barrel increase in distillates
stocks. The U.S. Energy Information Administration will release
inventory data for the week to June 20 on Wednesday at 1435
GMT.
A weak dollar, worries of further supply disruptions from
Nigeria as well as simmering tensions between Iran and Israel
also kept oil prices near record levels, analysts said.
The dollar held steady against the yen and euro on
Wednesday after dipping the previous day as a report showed
that U.S. consumer confidence had plunged to a 16-year low,
raising more concerns about the economy. []
SUPPLY HOPES DIM
Markets are eyeing the dollar ahead of the U.S. Federal
Reserve's interest rate decision on Wednesday. The Fed began a
two-day policy meeting on Tuesday and is expected to leave its
benchmark interest rate unchanged.
The United Arab Emirates would only increase oil production
as part of a decision agreed by all of OPEC, Oil Minister
Mohammed al-Hamli said on Wednesday, dashing faint hopes it
might follow recent Saudi boosts. []
Also putting a damper on medium-term supply hopes, Kuwait's
oil minister said on Wednesday the country, one of the few OPEC
members with spare capacity, planned to boost crude production
capacity by 300,000 bpd, rather than actual output, by
mid-2009. []
In Nigeria, Royal Dutch Shell <RDSa.L> said it restarted
production at its 220,000 barrels per day Bonga offshore field
after an attack by militants last week. []
A senior UN official appointed by Nigeria to help end
unrest in the oil-producing Niger Delta said on Tuesday he
would seek a 90-day truce with militants as a first step
towards formal peace talks. []
Senior oil workers held a limited strike at Chevron <CVX.N>
offices on Monday. While the stoppage has not hit output, it
has added to concerns about further disruptions in the OPEC
nation, where militant attacks shut 340,000 barrels per day
(bpd) of production last week.
Tensions between Israel and Iran over Tehran's nuclear
programme are also keeping supply jitters alive.
Analysts are concerned about threats to the Straits of
Hormuz, a narrow waterway separating Iran from the Arabian
Peninsula through which roughly 40 percent of the world's
traded oil flows.
(Editing by Ramthan Hussain)
