Oil steadies ahead of US stocks

Oil prices steadied on Wednesday, as traders waited to see if a threatened strike in Nigeria would cut its crude exports and whether gasoline inventories in the United States have built as forecast. London benchmark Brent crude edged 3 cents lower to $71.81 a barrel, after losing 34 cents on Tuesday when the market pulled back from a 10-month high.
US light sweet crude fell by 17 cents to $68.93 a barrel, after a weeklong rally that lifted prices by nearly $4. Unions in Opec producer Nigeria were readying a general strike to begin later in the day after they rejected government concessions on fuel prices as too little, too late.
Union leaders have said the strike would be total, paralysing oil production and exports from the world's eighth-largest exporter and a major US supplier, although there was some uncertainty over how quickly this would happen.
"We believe that even if the strike goes on, oil supply disruptions are likely to prove minimal this was historically the case," said Barclays Capital, adding that the strike still highlighted market vulnerability to supply-side disruptions.
Expectations of higher US fuel stocks may mute the impact on prices, with analysts seeing a 1 million-barrel rise in gasoline inventories and an 800,000-barrel increase in distillate fuels, a Reuters poll found.
Crude stocks, already near seasonal highs, were forecast to build by 100,000 barrels. But the focus will be on whether struggling US refiners are able to lift supplies of gasoline during the peak summer demand season while also reviving low heating fuel stocks.
"Continuing refinery woes were expected to keep US product inventory builds once again at a minimum for the week," said Antoine Half at Fimat, after last week's data showed gasoline stocks had unexpectedly failed to build.
Iran's nuclear programme is also keeping markets on edge, with a senior oil official saying on Tuesday that Tehran would not rule out using oil as a weapon in its dispute with the West. Iran's chief nuclear negotiator and the AEU's foreign policy chief meet for a new round of talks on June 23. Traders are keeping an eye on violence in the Gaza Strip.
US crude hit a record high of $78.40 a barrel nearly a year ago on fears that fighting between Israel and Lebanese Hezbollah guerrillas could spread to Middle East oil producers.
Another potentially bullish factor is the hurricane season in the Gulf of Mexico. The North Atlantic is likely to see around 10 tropical storms this year, fewer than the long-term average for the July-to-November period, Britain's leading weather forecaster, the Meteorological Office, said on Tuesday.