>Crude trims gains on equities; await DOE data

London - Crude futures trimmed gains Thursday morning due to falling equities and a slight rebound in the dollar as well as cautious sentiment ahead of key U.S. oil inventories data.

Crude futures hit intraday highs after the International Energy Agency revised up global oil demand by 500,000 barrels a day for 2009 and 2010 in its monthly Oil Market Report. But the gains proved to be short-lived, and the market soon succumbed to weakness in equities and gold.

"The IEA report is slightly supportive, but I think the market is still totally dominated by economic factors, particularly the dollar," said Tony Machacek, vice president of energy broker Bache Commodities Ltd.

At 1040 GMT, the front-month October Brent contract on London's ICE futures exchange was up 16c at $69.99 a barrel.

The front-month October light, sweet, crude contract on the New York Mercantile Exchange was trading 38 cents higher at $71.69 a barrel.

The ICE's gasoil contract for September delivery was down $8.25 at $562.00 a metric ton, while Nymex gasoline for October delivery was down 44 points at 182.37 cents a gallon.

Global oil demand in both 2009 and 2010 is now expected to be 500,000 barrels a day higher than organization's August estimate, at 84.4 million barrels a day and 85.7 million barrels a day respectively, the IEA said.

"We would expect the IEA to make further upward revisions to oil demand in their next report as for now they have adjusted for the 2009 higher-than-expected demand but we do not think that they have yet adjusted their demand models for the higher GDP growth forecast," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.

The IEA was still using a World GDP growth assumption of +1.9% for 2010 from the International Monetary Fund's April outlook. While the IMF September outlook isn't "officially" out yet, it is widely leaked to be +2.9% for 2010, Jakob said.

The IEA also expects global refinery runs to rise in the fourth quarter, reflecting the first annual growth in refining activity since the third quarter of 2008.

The Organization of Petroleum Exporting Countries' decision to keep its output level unchanged failed to have an effect on the market, as it was widely expected by the market, analysts said.

The focus of the market is now switching to the upcoming oil inventories data by the Department of Energy, due 1500 GMT Thursday.

Wednesday, the American Petroleum Institute data reported a big drop of 7.2 million barrels in crude oil stocks in the week ending Sept. 4. However, it remains to be seen whether the DOE data posts a similar drop, due to constant divergence of the two sets of data.

A Dow Jones Newswires' survey showed crude oil stocks are likely to be down 1.6 million barrels, while gasoline stocks are expected to drop by 1.3 million barrels, and distillates stocks are forecast to be 600,000 barrels higher, according to an average of forecasts by 15 analysts.

SOURCE: COMMODITIESCONTROL