Oil edges towards $ 61, US fuel stocks decline seen

LONDON, Mar 7 (Reuters) - Oil rose towards a barrel on Wednesday as the prospect of further declines in gasoline inventories in top consumer the United States outweighed concern over the health of its economy.

Oil has proven relatively immune to the sell-off in global equities. At near , U.S. crude is more than up on mid-January levels and treble the level from the start of 2002.

U.S. crude traded up 16 cents at .85 a barrel by 1000 GMT, after gaining 62 cents on Tuesday. London Brent crude was up 30 cents at .69.

U.S. Treasury Secretary Henry Paulson on Wednesday predicted stable growth for the U.S. economy and the U.S. government said its fuel consumption would remain strong.

But investors continued to fret over risk and the state of the U.S. economy after a week of steep losses. A tentative global share price recovery stalled in Asia and Europe on Wednesday.

London's FTSE 100 was down 0.4 percent by 0845 GMT and the FTSEurofirst 300 index of top European shares was 0.1 percent higher at 1,461.7.

Oil dealers were looking for signals of demand strength from U.S.

data due later on Wednesday. A Reuters poll of analysts forecast a 1.4 million-barrel drop in U.S. gasoline stocks ahead of peak demand in summer when motorists take to the road.

They also expect a 2 million barrel rise in crude stocks as refinery problems cut runs, while a cold snap was seen pushing down distillates stocks, including heating oil, by 2.5 million barrels.

Traders were also keeping a wary eye on OPEC member Iran's standoff with the West over its nuclear programme.

Major powers working on a U.N. resolution to impose new sanctions on Iran probably will not complete a draft text by the end of the week as expected, diplomats said after another round of talks on Tuesday.

REUTERS CS PM1636