Oil up on expected US stock draw; Greek, China worries drag

Oil futures steadied early on Wednesday on an expected drop in US inventory, but worries over the Greek debt crisis and China's stock market turmoil dragged on prices.

A Reuters poll flagged a 700,000-barrel decline in US oil inventory, while industry group American Petroleum Institute (API) estimated a drop of nearly 960,000 barrels. Government data will be published on Wednesday. 

Front-month US crude futures were trading at USD 52.79 per barrel at 0036 GMT, up 46 cents from their last settlement. The slight gain followed an 8 percent fall between Monday and Tuesday that pulled the contract down to levels last seen in April.

Front-month Brent crude edged up 39 cents to USD 57.24 a barrel following an almost 6 percent between Monday and Tuesday.

"Crude oil prices registered a slight gain ... (but) volatility in crude oil prices has increased dramatically in July, up by 40 percent in the last six trading days. Funds are contributing to the sell-off, with CFTC speculators reducing net-long position in WTI oil by 8 percent in the latest week," ANZ said on Wednesday.

Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.

Chinese stocks fell again on Tuesday, taking little comfort from a slew of support measures unleashed by Beijing in recent days, pulling down the benchmark CSI300 index by around 30 percent since June, triggering a curb in numerous initial public offerings (IPOs) as well as trading suspensions.

Overall consumer demand in China could stall if the stock market crisis continues, hitting commodity consumption, an analyst said.

"The stock market crash doesn't bode well for the (Chinese) economy. If your stock market account is shredded, you won't buy your white goods," said Ed Meir at INTL FCStone.