* U.S. crude inventories fall, API says
* Market awaits EIA U.S. fuel stock report at 1430 GMT
* EIA raises 2010 world oil demand forecast
(Updates prices, detail throughout)
By David Sheppard
LONDON, Oct 7 (Reuters) - Oil prices rose for the third
straight day on Wednesday, edging above $71 a barrel after an
industry report showed a drawdown in U.S. crude inventories,
boosting the view demand was recovering.
U.S. crude for November delivery <CLc1> rose 19 cents to
$71.07 a barrel by 1125 GMT, adding to Tuesday's gains of 47
cents. London Brent crude <LCOc1> rose 25 cents to $68.81.
Oil's gains followed a report by the American Petroleum
Institute saying crude stocks fell 254,000 barrels in the week
to Oct. 2, defying forecasts in a Reuters poll of analysts for a
2.2-million-barrel increase. [] []
The API report is seen as a precursor to the more
authoritative data issued by the U.S. Energy Information
Administration (EIA), which will be released at 10:30 a.m. EDT
(1430 GMT) on Wednesday.
"Over the last two weeks, the largest pricing action has
been on the release of the EIA data rather than on exogenous
data and the same is likely today," said Olivier Jakob, managing
director of consultants Petromatrix in Zug, Switzerland.
The EIA also raised its global oil demand estimate by
170,000 barrels a day for the fourth quarter on Tuesday and said
it expected consumption to rise by 1.1 million bpd next year,
versus earlier expectations of a 910,000 bpd rise.
[]
EQUITIES SUPPORT FOR NOW
The second day of gains for Asian and European shares, on
growing confidence that a global economic recovery is underway,
helped to support oil prices.
Oil has rebounded from an 11-week low of around $66 in late
September back above the $70 level, but some analysts caution it
could slip back in the near term.
"Oil looks like it's on shaky ground as we approach the U.S.
third quarter (corporate) reporting season. A lot of near term
price gains have been won off a rebounding equity market," said
Mark Pervan, a commodities analyst at the Australia & New
Zealand Bank.
"I suspect the third-quarter reporting card will struggle to
match the impressive second-quarter results, which were mainly
driven by one-off aggressive cost cutting."
After having jumped by around 40 percent in the second
quarter, oil prices have squeezed out a gain of only 1 percent
in the last quarter, trading in a band of between $65-$75.
While the global economy is healing from the financial
crisis, the recovery, along with energy demand, remains fragile.
A U.S. Federal Reserve official said on Tuesday that while
the world's largest economy was clearly rebounding, it was too
soon to begin to withdraw the Federal Reserve's massive support.
[]
Weakness in the dollar has also supported commodities priced
in the greenback in recent days as they become cheaper for
holders of other currencies. []
The dollar remained under pressure on Wednesday, though
analysts said selling was moderating.
Gold <XAU=> has risen to a series of record highs over the
past two days, with the precious metal touching $1,048.20 an
ounce on Wednesday.
(Additional reporting by Fayen Wong in Perth; Editing by
William Hardy)
