Oil up ahead of U.S. inventory data; draw hopes rise on API

By Barani Krishnan

NEW YORK (Reuters) - Oil prices rose about 1 percent on Thursday on bets for a strong weekly decline in U.S. crude inventories, but traders cautioned of a glut in refined oil products that could weigh again on the market.

The U.S. government's Energy Information Administration will issue its weekly oil supply-demand data at 11:00 a.m. EDT (1500 GMT). Analysts polled by Reuters forecast a seventh weekly drop in crude stockpiles, with a draw of 2.3 million barrels for the week to July 1.

The American Petroleum Institute, however, late Wednesday raised expectations for a bigger drawdown by reporting a drop of 6.7 million barrels.

The trade group's data has varied considerably with the official data in the past as it is based on voluntary reporting by API members and are a much smaller sample to what the EIA tracks.

Even so, crude futures extended gains in Wednesday's post-settlement trade after the API data, rising about 2 percent in total, after losses of about 5 percent over two previous sessions.

"I would think if the (API) crude data is confirmed, the bears who have leaned on a lack of a draw in crude stocks will take a vacation from that concept and look for more data before resuming their shorting of oil," said Scott Shelton, energy futures broker at ICAP in Durham, North Carolina.

Brent crude futures were up 51 cents, or 1 percent, at $49.31 per barrel by 10:13 a.m. EDT (1413 GMT).

U.S. crude futures rose 58 cents, or 1.2 percent, to $48.01.

Prices came off their highs after traders said market intelligence firm Genscape reported a draw of just about 181,000 barrels at the Cushing, Oklahoma delivery hub for U.S. crude futures during the week to July 5. Some had expected a bigger drop there, given the magnitude of the total U.S. draw reported for the week to July 1 by API.

Despite the bullish sentiment for crude, some investors remain cautious over oil's fundamentals after a glut in U.S. gasoline stocks built in recent weeks despite the busiest driving season for driving.

Gasoline stocks in the U.S. East Coast, home to the New York Harbor delivery point for the fuel, reached a record high of 72.5 million barrels in the week ended June 24, data showed. Vessels carrying gasoline-making components could not unload at the harbor this week because of lack of space.

(Additional reporting by Libby George in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy)