Oil rises in nervous trade before US energy report

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World oil prices climbed on Wednesday ahead of the latest weekly snapshot of energy inventories in top crude consumer the United States, and one day after sliding on fears of weaker demand.

Traders shrugged off a eurozone meeting that failed to land a killer blow in the battle to restore debt confidence.

New York's main contract, West Texas Intermediate light sweet crude for September delivery, gained 97 cents to $87.62 a barrel.

Brent North Sea crude for October delivery jumped by $1.14 to $110.27 a barrel. The September contract expired at the close on Tuesday.

"The mood is still nervous on the crude oil market, with all news causing the market to react markedly ... in its search for some direction," said Commerzbank analyst Carsten Fritsch.

Later on Wednesday, at 1430 GMT, the US government's Energy Information Administration (EIA) will publish its weekly snapshot of oil inventories in the world's biggest crude consuming nation.

"Today, the market will briefly turn its attention to the weekly US fuel inventory numbers," said VTB Capital analyst Andrey Kryuchenkov.

"We expect the EIA to report little change or nearly flat US crude inventories largely due to slowing imports and lower refining capacity."

Market expectations are for American crude reserves to have fallen by 600,000 barrels in the week to August 12, according to analysts polled by Dow Jones Newswires.

Gasoline or petrol inventories are forecast to drop 1.2 million barrels, while distillates -- which include diesel and heating fuel -- are seen rising by 500,000 barrels.

Crude futures had fallen on Tuesday as worries about global economic growth continued to cast a shadow over the market and stoked concern over the strength of energy demand.

The main news hanging over the market was Germany's reporting economic growth of just 0.1 percent in the second quarter, raising fears that the eurozone powerhouse economy was losing momentum.

And the entire 17-nation eurozone slowed to 0.2-percent growth in the same period, according to Eurostat's preliminary official estimate.

"The crude oil market is currently driven mainly by macroeconomic fear factors," said Filip Petersson, strategist at SEB Commodity Research.

Tuesday's summit of French President Nicolas Sarkozy and German Chancellor Angela Merkel, who both called for the formation of a eurozone economic government to help tame the bloc's debt crisis, did little to alter sentiment.

Europe's power couple also said they would propose a new financial transaction tax.

"Sarkozy and Merkel proposed comprehensive measures to tackle eurozone matters, such as increasing economic cooperation in the zone and taxes on financial transactions, but did not manage to formulate a conjoint position on the topics deemed most important," said JBC Energy analysts in Vienna.

"As such, the size of the European bailout fund and the possibility for a eurobond were not touched -- which left those out on a limb who had raised optimism ahead of the meeting."

© 2011 AFP

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