Oil holds over 74 dollars as Iran resists West pressure

SINGAPORE, July 12 (Reuters) Oil stood firm at above a barrel on Wednesday as the market's focus shifted from Iran's recalcitrance on its nuclear programme to an expected draw in U.S. gasoline stocks after holiday drivers took to the roads.

U.S. crude futures were unchanged at .16 a barrel by 0235 GMT, holding steady after gaining 55 cents on Tuesday but still shy of last week's all-time high of .78 a barrel.

London Brent slipped 17 cents to .50.

Prices rallied on Tuesday after Iran reiterated its refusal to back down from producing nuclear fuel and defied calls for an early response to an offer of incentives from Western nations meant to end the months-long standoff, which traders fear could disrupt crude supplies from OPEC's second-largest producer.

Talks between the EU's chief nuclear negotiator, Ali Larijani, and EU foreign policy chief Javier Solana on Tuesday ended with no clear indication of movement. A spokesman for Solana said the meeting was ''disappointing''.

''The fear factor was on the rise again -- Iran's President did not sound in a conciliatory frame of mind,'' said Tobin Gorey of the Commonwealth Bank of Australia. ''Traders response to the remarks is a reminder of why few will want to hold short positions in the oil market.'' Iran has said it will respond to the incentives in late August.

The United States, which has accused Tehran of working to build nuclear weapons, has said it wants a clear response before the Groupof Eight meets this weekend. The row has been a key concern in the oil market this year, contributing to a near 22 percent rally.

Healthy fuel demand in top oil consumer the United States has also supported prices. Gasoline inventories were seen falling 100,000 barrels last week amid a surge in demand over the U.S.

Independence Day holiday weekend, a Reuters survey found.

Crude oil stocks, which remain above year-ago levels, were expected to fall 1.2 million barrels as refinery runs rose.

Government data are due at 1430 GMT. [EIA/S] Last week, data showed demand in the previous month was up 1.4 percent on the same time last year. The U.S. consumes more than 40 percent of the world's gasoline, and changes in demand for the motor fuel can make a big impact on oil markets.

The U.S. government's top energy forecasting agency on Tuesday raised its estimate for the average price American drivers will pay for gasoline this summer to SINGAPORE, July 12 (Reuters) Oil stood firm at above $74 a barrel on Wednesday as the market's focus shifted from Iran's recalcitrance on its nuclear programme to an expected draw in U.S. gasoline stocks after holiday drivers took to the roads.

U.S. crude futures were unchanged at $74.16 a barrel by 0235 GMT, holding steady after gaining 55 cents on Tuesday but still shy of last week's all-time high of $75.78 a barrel.

London Brent slipped 17 cents to $73.50.

Prices rallied on Tuesday after Iran reiterated its refusal to back down from producing nuclear fuel and defied calls for an early response to an offer of incentives from Western nations meant to end the months-long standoff, which traders fear could disrupt crude supplies from OPEC's second-largest producer.

Talks between the EU's chief nuclear negotiator, Ali Larijani, and EU foreign policy chief Javier Solana on Tuesday ended with no clear indication of movement. A spokesman for Solana said the meeting was ''disappointing''.

''The fear factor was on the rise again -- Iran's President did not sound in a conciliatory frame of mind,'' said Tobin Gorey of the Commonwealth Bank of Australia. ''Traders response to the remarks is a reminder of why few will want to hold short positions in the oil market.'' Iran has said it will respond to the incentives in late August.

The United States, which has accused Tehran of working to build nuclear weapons, has said it wants a clear response before the Groupof Eight meets this weekend. The row has been a key concern in the oil market this year, contributing to a near 22 percent rally.

Healthy fuel demand in top oil consumer the United States has also supported prices. Gasoline inventories were seen falling 100,000 barrels last week amid a surge in demand over the U.S.

Independence Day holiday weekend, a Reuters survey found.

Crude oil stocks, which remain above year-ago levels, were expected to fall 1.2 million barrels as refinery runs rose.

Government data are due at 1430 GMT. [EIA/S] Last week, data showed demand in the previous month was up 1.4 percent on the same time last year. The U.S. consumes more than 40 percent of the world's gasoline, and changes in demand for the motor fuel can make a big impact on oil markets.

The U.S. government's top energy forecasting agency on Tuesday raised its estimate for the average price American drivers will pay for gasoline this summer to $2.88 a gallon, reflecting higher oil costs that have cut into gasoline demand.

REUTERS SY RK0942 .88 a gallon, reflecting higher oil costs that have cut into gasoline demand.

REUTERS SY RK0942