U.S. oil prices held firm just below $40 on Wednesday ahead of new data expected to show increases in American fuel stockpiles, but the market remained vulnerable to any hints of a disruption to supply. U.S. light crude gained 16 cents to $39.60 a barrel, recouping some of this week's losses of almost 40 cents. "The market is poised to move higher. Any bad news, however small, and it will start to correct higher," said a broker at a French bank based in New York. "There are wild swings in expectations for today's EIA data but I don't see this market coming off unless there are very big builds in U.S. crude stocks," he said. The U.S. government Energy Information Administration (EIA) will release its weekly report at 1430 GMT, which is expected to show increases across the barrel in U.S. fuel inventories. The data is used as a snapshot for supply and demand in the world's biggest oil consumer. A survey of seven analysts predicted U.S. crude stocks would rise by 1.4 million barrels in the week to July 7. The analysts forecast gasoline supplies to increase by 500,000 barrels and for distillates to rise by 2.1 million barrels.
Brokers said forecasts varied widely this week with some dealers expecting crude inventories to fall. Strong global oil demand has left little room to cope with supply hitches. Oil prices have stayed close to $40 in recent months on worries of disruptions to oil flows in Iraq, Nigeria and Russia, where the biggest producers, YUKOS, faces possible bankruptcy. Industry sources in Iraq said on Tuesday the country's oil exports would remain limited to southern terminals as sabotage and infrastructure defects prevent a reopening of a northern pipeline to Turkey. Iraq exports about 1.8 million barrels per day (bpd) from southern oil terminals at Basra and Khor al-Amaya and officials recently said they hoped to resume overseas sales of about 350,000 bpd from Turkey's Mediterranean port, Ceyhan. "It (the northern pipeline) cannot be operated non-stop. Saboteurs know every section and they are hitting it at will," a well-placed engineer said of the dual northern pipelines. Before the U.S.-led invasion last year, Iraq exported 800,000 bpd through Ceyhan. Fears over gasoline supplies to meet peak summer demand have prompted U.S. and European refiners to crank up production of the auto fuel at the expense of heating oil, triggering an almost 15 percent rise in gas oil futures prices in London since end-June.
"The maximisation of the European refineries' gasoline production has put pressure on gas oil, whose stocks are at their lowest since 2001, when demand was 10 percent weaker than today," Societe General said in a report. "The European actors are particularly worried because German households have not yet replenished their hometanks," SG said, pointing to latest figures indicating that the Germans were eight percent behind normal averages over 10 years, showing a deficit of 16.7 million barrels///