News

By Paul Carsten

LONDON (Reuters) -Oil prices steadied on Wednesday, with benchmark Brent holding above $77 a barrel, after steady sell-offs driven by expectations of reduced Chinese demand and diminishing concerns the conflict in the Middle East could spread and disrupt supply.

Brent crude futures were up 14 at $77.34 a barrel by 1142 GMT. U.S. West Texas Intermediate crude was 10 cents higher at $73.27.

Since peaking above $82 on Monday last week, Brent had shed 6.2% of its value by the end of trading on Tuesday, closing at a two-week low of $77.20. WTI fell 7.5% in the same period.

As expectations swirl economic weakness in China, the world's biggest crude importer, will subdue demand, stocks in the United States, the world's biggest producer and consumer of oil, are set to rise.

U.S. crude oil stocks were forecast to have risen last week, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline and distillate stocks fell, however, according to the sources.

Official U.S. government inventory estimates are set to be released on Wednesday at 10:30 a.m. (1430 GMT).

Meanwhile, U.S. Secretary of State Antony Blinken wrapped up a trip to the Middle East intended to help broker a ceasefire agreement in Gaza.

Blinken and mediators from Egypt and Qatar have raised hopes for a U.S. "bridging proposal" that could shrink the gaps between the two sides in the 10-month-old war.

"Hopes of a cease-fire between Israel and Hamas have weighed on oil, along with lingering demand concerns," ING commodities strategists said.

"While weaker Chinese demand has been well reported, refinery margins around the globe have been under pressure for much of August, suggesting that these demand concerns are not isolated to just China," they said.

China's economic struggles have contributed to weak processing margins and low fuel demand that has curbed operations at state-run and independent refineries.

Imports of crude oil from Russia fell in July by 7.4% from a year ago, while fuel oil imports retreated for a third straight month, customs data showed this week.