By Alex Lawler
LONDON (Reuters) - Oil held above $64 a barrel on Wednesday before a U.S. government report expected to show domestic crude inventories fell for an eighth week, a sign that a supply glut is easing.
The industry group American Petroleum Institute (API) on Tuesday reported a drop in U.S. crude stocks, ahead of Wednesday's official data. Doubts over the likelihood of a deal next week on Iran's nuclear work also supported prices.
Brent crude rose 10 cents to $64.55 a barrel by 1155 GMT. U.S. crude gained 9 cents to $61.10. Both contracts made gains on Tuesday.
"There could be some support from the APIs," said Tony Machacek, an oil broker at Jefferies Bache in London. "We're probably going to be testing $66 to the upside," he added, referring to Brent.
A steady decline in U.S. crude stockpiles from a record high earlier this year has been supporting prices and inventories probably fell by 2.1 million barrels last week, the eighth consecutive drop, according to an analyst poll.
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Traders will be focusing on whether the U.S. government's supply report due at 1430 GMT confirms the 3.2-million-barrel decline reported on Tuesday by the API.
Crude was also supported by potential roadblocks for a nuclear accord between Iran and six world powers that would open the prospect of Iran boosting crude oil exports, as a self-imposed June 30 deadline approaches.
Iran's supreme leader on Tuesday ruled out freezing sensitive nuclear work for a long time, and Iran's parliament passed a bill banning access for U.N. inspectors to its military sites and scientists.
Oil Minister Bijan Zanganeh has said Iran could raise oil output by 500,000 barrels per day within a month of a lifting of sanctions, although analysts and other OPEC delegates doubt a recovery would be that rapid.
The debt crisis of Greece is also on the market's radar but is less of a factor for oil than for other assets such as equities, which in Europe traded lower on Wednesday as doubts returned over the issue.
"Greece continues to make headlines but there are so many of them that it is difficult to trade them," said Olivier Jakob, oil analyst at Petromatrix.
The dollar index eased as investors focused on the prospects for higher U.S. interest rates. A weak dollar makes commodities priced in dollars cheaper for holders of other currencies.
(Additional reporting by Keith Wallis; Editing by William Hardy and Pravin Char)