>Crude breaches USD71/bbl ahead of FOMC meeting

Singapore - Crude futures breached $71 a barrel in Asia Tuesday ahead of the U.S. Federal Open Market Committee meeting that starts later in the day.

Oil markets are expecting the FOMC meeting to be upbeat about the U.S. economy, said Ben Westmore, commodities economist for National Australia Bank in Melbourne. "They are likely to have some sort of comment on the (improving) global growth outlook."

At 0640 GMT, the contract for light, sweet crude for September delivery traded at $71.05 a barrel, up 45 cents. September Brent crude on the ICE futures exchange was up 43 cents at $73.93 a barrel.

Crude oil futures have been correlated with equity markets as of late, said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. However, he said equity markets were overbought and would likely decline between 15% and 25% this quarter - a correction that could spill over into crude markets.

"The market may test a little bit higher, but in the near term, it likely will fall down to the low $60s," he said.

Meanwhile, crude inventories data from the U.S. Energy Information Administration could provide some direction for the market Wednesday, analysts said.

As demand for distillates such as gasoline remains bearish, U.S. refineries may continue to cut back on processing of crude, creating a further build up in stockpiles, NAB's Westmore said.

U.S. crude inventories rose more than expected in the week to July 31, the EIA reported. Data due this week is expected to show a modest rise in crude stocks, according to a preliminary survey of analysts by Dow Jones Newswires.

ICE gasoil for September changed hands at $615.25 a metric ton, up $4.00 from Monday's settlement.

Front-month September reformulated gasoline blendstock, or RBOB, was up 146 points at 204.20 U.S. cents a gallon. September heating oil was up 140 points at 194.16 cents a gallon.

Source: COMMODITIESCONTROL