>Crude edges down, but econ optimism supports

Singapore - Crude oil futures edged lower Friday in Asia, taking a breather after soaring overnight on stronger fuel futures and an equities rally.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $67.05 a barrel at 0617 GMT, down 11 cents in the Globex electronic session. September Brent crude on London's ICE Futures exchange fell 1 cent to $69.24 a barrel.

"I won't read too much into it (the slight drop in Nymex futures)," David Moore, commodity strategist at Commonwealth Bank of Australia said, adding a slightly stronger U.S. dollar might have caused the fall.

Optimism over an economic recovery continues to overrule fundamentals. Recovery hopes were given a further boost Thursday after data showed sales of existing homes in the U.S. had increased for a third straight month.

"The expectation is that fuel demand will recover sometime quite soon," said Toby Hassall, research analyst at Commodity Warrants Australia.

But "we really haven't had any evidence of any recovery yet. There will always be that downside to prices, given the ongoing weakness in the physical market."

Nymex reformulated gasoline blendstock for August - the benchmark gasoline contract - spiked overnight as buyers expect supplies to tighten after Wednesday's data showed an unexpected large decline in refinery activity.

"If traders want to look at the bullish side, lower utilization means fewer refined products; if they want a bearish argument, it means lower crude oil demand," wrote Peter Beutel, president of energy advisory firm Cameron Hanover, in a note to clients Friday.

"Traders could just as easily have focused on lower crude demand; the fact that they did not tells us something."

However, he said "the bears still have a chance, but they will need to see prices turn back from their retracement zones quickly, or these prices seem likely to become little more than surrogates for equities prices."

Meanwhile, crude stocks at Cushing, Okla. are likely to rise, given the contango in the crude market and run cuts at refineries, Jim Ritterbusch from Ritterbusch and Associates said in a note.

"We will maintain our view of a potential top in nearby WTI futures within the $67-$68 zone," Ritterbusch said, assuming a slowdown in equities markets.

At 0618 GMT, oil product futures were mixed.

Nymex reformulated gasoline blendstock for August rose 5 points to 191.37 cents a gallon, while August heating oil traded at 176.20 cents, 24 points lower.

ICE gasoil for August changed hands at $564.25 a metric ton, up $1.50 from Thursday's settlement.

Source: COMMODITIESCONTROL