WSJ:OIL FUTURES: Crude Up Over 1% On API US Oil Stock Data; DOEs Eyed
--Oil futures up over 1% on bigger-than-expected decline in U.S. products inventories
--Gains capped by European stock market weakness following Germany-France meeting
--All eyes to turn to DOEs later Wednesday for confirmation of API data
By Selina Williams
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Crude oil futures were over 1% higher Wednesday as a bigger-than-expected draw in U.S. products inventories reported late Tuesday nudged prices up in thin volumes.
But oil price gains were capped by weakness in European stock markets, which were hit by the perceived inability of France and Germany at a meeting Tuesday to find a clear solution to the European debt crisis.
At 1058 GMT, the front-month September contract on the New York Mercantile Exchange was trading up 99 cents, or 1.1%, at $87.64 a barrel. The front-month October Brent contract on London's ICE futures exchange was up $1.18, or 1%, at $110.31 a barrel.
At Tuesday's meeting German Chancellor Angela Merkel and French President Nicolas Sarkozy pushed for closer euro-zone integration, including deficit limits, and proposed taxing financial transactions. However, the leaders noted joint euro-zone bonds could only be a longer-term option, thus failing to deliver a crisis-busting initiative.
In the medium-term, the lack of a concrete outcome from the meeting is likely to keep oil market participants on their toes as it prolongs the uncertainty over Europe's sovereign debt issues, the region's economic growth and hence its oil demand, analysts said.
For the moment, however, the mood on the oil market was muted. Volumes were thin and neither the bulls nor the bears seemed to be firmly in the ascendancy, leading to more consolidation around current trading levels, analysts said.
Nymex crude is seen consolidating in the range of $85-$88 a barrel, while Brent crude is expected to consolidate around $108-$110 a barrel, according to Myrto Sokou, research analyst at Sucden Financial.
In the absence of any big U.S. macro-economic data Wednesday, investors are expected to focus on the U.S. Department of Energy's weekly report on U.S. oil inventories at 1430 GMT--a key indicator of fundamentals in the world's biggest oil consumer.
Confirmation of the American Petroleum Institute's late Tuesday report showing a steeper-than-anticipated decline in petroleum products stocks would likely be bullish for prices.
Crude stockpiles are expected to drop by 400,000 barrels, according to the mean of six analysts' forecasts gathered by Dow Jones Newswires. Gasoline stocks are expected to fall by 1.3 million barrels and distillates, which include diesel fuel and heating oil, are expected to rise by 700,000 barrels.
At 1059 GMT, the ICE's gasoil contract for September delivery was up $8.25, or 0.8%, at $935.75 a metric ton, while Nymex gasoline for September delivery was up 421 points, or 1.5%, at $2.8959 a gallon.
