TOKYO (Reuters) - Brent crude was steady on Wednesday after four days of gains, staying above $115 a barrel as investors remained cautiously optimistic a German court would approve the legality of the euro zone's bailout fund.
The ruling by Germany's Constitutional Court at 0800 GMT, as well as recent weak U.S. economic data that raised expectations for a third round of bond buying by the Federal Reserve, have dragged on the dollar and supported oil prices.
London Brent crude for October delivery, which expires on Thursday, was trading 2 cents higher at $115.42 a barrel by 0326 GMT, after settling up 59 cents on Tuesday. U.S. crude for October delivery was down 14 cents at $97.03 a barrel.
"There are no movements ahead of the Germany ruling," said Masaki Suematsu, energy team sales manager at Newedge Japan. "If (the bailout fund) was ruled illegal, it would be a surprise, sending shares and the euro down sharply."
The greenback came under further pressure after Moody's Investors Service on Tuesday warned the United States' credit rating could be downgraded if 2012 budget negotiations do not produce debt-reducing policies.
A surprise increase in U.S. crude stockpiles weighed on prices, however. U.S. crude stocks rose 221,000 barrels last week, the American Petroleum Institute said on Tuesday, against expectations that inventories would be 2.6 million barrels lower.
Gasoline stocks fell 4.2 million barrels and distillate stocks rose 2.5 million barrels, the API said. Gasoline stocks were expected to be 1.6 million barrels lower and distillate supplies were expected to be near flat, up only 200,000 barrels.
The API data will be followed by more closely watched numbers from the U.S. Energy Department at 10:30 a.m. EDT (1430 GMT).
OIL RESERVES
OPEC production rose about 260,000 barrels per day (bpd) in August, the producer group said on Tuesday, as dwindling Iranian exports in the face of European and U.S. sanctions over its disputed nuclear programme were offset by other nations in the 12-member group.
The U.S. government's Energy Information Administration (EIA) on Tuesday raised its forecast for global oil demand growth and lowered non-OPEC oil production for 2013, but added that non-OPEC output is expected to increase enough to meet demand.
OPEC and EIA both emphasized the possibility that a worsening European crisis could still drag down oil prices, warnings that may complicate deliberations over whether to tap into strategic oil reserves again.
The International Energy Agency (IEA) normally coordinates strategic stock releases by member states, though some analysts think the U.S. could act unilaterally or in concert with individual members if widespread agreement on a move cannot be reached.
Investors were also looking out for the IEA's monthly report on global oil markets later in the day.
Source: http://news.yahoo.com/brent-steady-above-115-ahead-german-ruling-054840535--finance.html
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