Oil steady ahead of inventory report

[August 20, 2008]  BEIJING (AP) -- Oil prices were little changed Wednesday as investors awaited a weekly crude inventory report for evidence an economic slowdown in the U.S. is cutting consumer demand for oil products such as gasoline.

By midday in Europe, light, sweet crude for September delivery was down 6 cents at $114.47 barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it traded as high as $115.36 before easing back.

The contract rose $1.66 overnight to settle at $114.53 a barrel.

In London, October Brent crude shed 16 cents to $113.09 a barrel on the ICE Futures exchange.

Investors are waiting for a report later Wednesday by the U.S. Energy Department's Energy Information Administration on U.S. oil stocks for the week ended Aug. 15. The petroleum supply report was expected to show that gasoline inventories fell by 3 million barrels, according to the average of analysts' estimates in a survey by energy information provider Platts.

"People are going to be looking at the gas numbers," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore.

The Platts survey also showed that analysts projected oil stocks rose 1.7 million barrels and distillates went up 1.2 million barrels during last week.

Tropical Storm Fay -- which contributed to higher oil prices over the past few days -- moved inland in the United States on Tuesday, bypassing oil and gas platforms in the Gulf of Mexico.

Energy markets, however, were still nervous, as some computer models showed Fay possibly becoming a "boomerang storm" and moving back toward the Gulf, said Olivier Jakob of Petromatrix in Switzerland.

JBC Energy in Vienna, Austria, also mentioned "hurricane risk" as one of several factors supporting oil prices.

Oil prices have rebounded after falling about $35, or nearly a quarter, from their all-time trading record $147.27 on July 11 on expectations that high gasoline prices and slowing economic growth in the U.S., Europe and Japan will undermine global energy demand.

"Just as the market overshot to the upside, it overshot the other way," Kornafel said. "It looks like we're consolidating between $112 and $118."

Weighing on oil prices was a slightly stronger dollar. The 15-nation euro traded was down to $1.4695, while the dollar rose above 110 Japanese yen. A rising dollar encourages investors who had been seeking commodities like oil as a hedge against inflation to sell their positions.

"I think credit markets need to improve in the U.S. before we see a sustained rally in the dollar," Kornafel said. "We may have hit a top for the dollar. I don't think this rally can last."

In other Nymex trading, heating oil futures rose 0.27 cent to $3.1264 a gallon, while gasoline prices fell 0.14 cent to $2.8625 a gallon. Natural gas futures increased 8 cents to $8.056 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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