Oil rose above $69 a barrel on Tuesday, lifted by an expected draw in U.S. crude stocks and better-than-expected U.S. retail sales data, but concerns about rising U.S. distillate inventories capped gains.
The market was awaiting the weekly crude inventory report from the American Petroleum Institute (API) at 2030 GMT. Analysts forecast a 2.7-million-barrel draw in crude stocks but a 1.5-million-barrel increase in distillates and an 800,000-barrel build in gasoline stocks.
Prices were little moved after OPEC left its 2010 oil demand forecast unchanged, saying evidence of an impending upturn in the world economy appeared to be gathering but that recovery would be gradual.
U.S. crude for October delivery rose 89 cents to $69.75 a barrel by 1343 GMT, while Brent was down 2 cents to $67.42. Trade in Brent was distorted by the expiry of the front-month contract at close of business on Tuesday.
There is a concern about inventory building, Christophe Barret, analyst with Calyon, told Reuters Television.
The amount of gasoil in storage will put some pressure on crude prices in the coming weeks, Barret said, adding that he thought U.S. crude would fall to $65 a barrel in the last three months of 2009.
The U.S. Energy Information Administration, a government agency, will issue its own inventory report on Wednesday.
VTB Capital analyst Andrey Kryuchenkov also said distillates would be the most-watched API number, with demand in them expected to rise as temperatures in North America drop in the run up to winter and on a pick-up in industrial production.
Sales at U.S. retailers rose at their fastest pace in three-and-a-half years in August, an indicator of reviving economic demand in the world's largest oil user.
The market was jittery after news the CME Group
But a source told Reuters on Monday that the CME will not boost enforcement of positions limits and that the advisory was routine.
Some oil traders said they interpreted the advisory as a CME warning that it could soon offer fewer exemptions for exceeding position limits.
There's a lot of talk about (the CME advisory), Kryuchenkov said. It comes on top of the ongoing CFTC investigation and lawmakers pushing for tougher regulation. It all piles up.
The U.S. Commodity Futures Trading Commission aims to rein in speculation in energy and commodity trading, especially oil. Excessive speculation has been blamed for sending crude on a run to nearly $150 a barrel in 2008.
Meanwhile, the dollar index <.DXY> was a touch stronger, off the one-year low of 76.457 points hit last week. A rising dollar makes dollar-denominated commodities more expensive to holders of other currencies.
(Additional reporting by Sambit Mohanty in Singapore and Jane Grieve in London; editing by Anthony Barker)