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Oil holds near $62 ahead of U.S. inventory data

Written by: Staff

LONDON, Mar 22 (Reuters) Oil held near on Wednesday before a weekly U.S. government report expected to show gasoline inventories in the world's largest consumer fell, raising Concern supply could grow tight in the coming driving season.

The Department of Energy report is expected to show U.S.

gasoline stocks fell by 1 million barrels last week, according to analysts polled by Reuters. Crude inventories are expected to have risen for a sixth consecutive week.

''The gasoline could be the focus because we've seen quite good demand for gasoline,'' said Christopher Bellew at Bache Financial. ''If there was to be any fallback in imports, there could be a gasoline-led rally.'' U.S. light crude for May delivery was down 28 cents at .06 a barrel by 1300 GMT (1830 IST). London Brent crude traded 6 cents higher at .19.

Hefty crude imports have already boosted U.S. crude stocks to seven-year highs, countering violence in Nigeria that has cut output there and concern that tension over Iran's nuclear work could disrupt supply.

Analysts expect the U.S. supply report, scheduled for release at 1530 GMT (2000 IST) on Wednesday, will show crude oil stocks rose by 2.5 million barrels.

''The only news will be the U.S. stocks,'' said Hiroyuki Kitakata, director of commodities business of Barclays Capital from Tokyo. ''But on the geopolitical front, the upside risk is more than the downside.'' SAUDI EXPANSION Saudi Arabia and other OPEC members have been pumping close to the limit in a bid to calm prices that hit a record .85 last August as hurricanes disrupted Gulf of Mexico supplies.

Top oil exporter Saudi Arabia vowed on Wednesday to maintain at least 1.5 million barrels a day of unused production capacity to guarantee its role as trustworthy supplier to the world.

To fulfil that aim, the kingdom sped through its 0 million Haradh oilfield project -- now pumping full flow at 300,000 bpd, Saudi Oil Minister Ali al-Naimi said.

The Saudi minister saw no let-up in increasing consumption despite the historically high cost of fuel.

''Price levels are not harming economic growth...From now to 2030, demand on oil is expected to grow by 50 per cent, therefore Saudi Arabia started lifting its production capacity,'' he said.

Output from OPEC's 11 members in March is expected to slip 300,000 bpd to 29.7 million bpd after militant attacks hit supply in Nigeria, consultant Petrologistics said on Wednesday.

The figure was down from a revised estimate of 30 million bpd in February, the consultancy said.

Besides the production loss in Nigeria, Iran's standoff with the West over its nuclear programme has helped put a floor under prices. Iran is the world's fourth-largest oil producer.

Iran said on Tuesday it would not be bullied by the U.S.

over its nuclear programme and was not worried that the country had been referred to the U.N. Security Council.

The U.S. still believes the Council can reach agreement in coming days on a statement calling on Iran to suspend uranium enrichment activities, a senior envoy said on Wednesday.


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