* Rise in fuel supplies lifts U.S. oil from 4-month low
* Coffee at 6-1/2 year low on South American supply growth
* Corn falls to 3-year low on rising crop expectations
By Marina Lopes
NEW YORK, Nov 6 (Reuters) - Oil futures led commodity markets higher on Wednesday, as draws in U.S. fuel supplies and worries about disruptions in Libya prompted buying at prices that had hit four-month lows.
Coffee tumbled, hitting hit 6-1/2 year lows and wheat sank while corn tumbled to the lowest price in more than three years, pressured by forecasts for a huge U.S. corn harvest.
The Thomson Reuters/Core Commodity CRB index settled up 0.33 percent, with gains in 10 of the 19 commodities it tracks. The index had fallen to near 1-1/2 year lows on Tuesday.
U.S. crude futures rose by more than $1 a barrel, rebounding from four-month lows. The U.S. benchmark’s discount to European Brent crude narrowed by $2 to a low of just under $10 during the session.
Prices got a big lift when U.S. Energy Information Administration data showed that gasoline and diesel stocks shrank far more than expected, even as crude oil inventories rose.
“I think the decrease in fuel inventories is the main driver in why the complex is moving higher,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
In Libya, protests by the minority Amazigh group, or Berbers, continued to hamper the OPEC member’s output.
The protests are threatening gas exports to Italy, Eni Chief Executive Paolo Scaroni told Italian radio on Wednesday.
Analysts said oil prices would stay under pressure due to weak demand, particularly in Europe.
“I would attribute (the market’s rise) to a countermove after heavy losses in the previous day,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.
Coffee prices tumbled as expectations of bumper crops from Brazil and Columbia, the world’s largest arabica producers, brought prices to their lowest since March 2007.
Wheat prices sank to their lowest since Sept. 24, while December corn prices fell to the lowest level in more than three years, on expectations of a massive corn harvest.
U.S. stocks rose on Wednesday, bolstered by upbeat European economic data, while the dollar fell on remarks by a senior Federal Reserve official that raised speculation of a prolonged federal stimulus program.
Arabica coffee prices sank to 6-1/2 year lows and teetered on the brink of $1 per lb on Wednesday as investors continued to bet on lower prices due to expectations of record crops in top-growers in South America, while cocoa eased from the previous day’s spike.
Building on the relentless selling of the past three weeks, benchmark December arabica coffee futures on ICE settled down 1.9 percent at $1.015 per lb, having earlier touched $1.010, its lowest since March 2007.
Traders eyed $1 as the next level of support, although some predict prices will test mid-90 cents before finding resistance. The front-month has not breached $1 since September 2006.
“Brazilian sales continue to be main pressure on the market,” said James Cordier, founder and president of Liberty Trading Group in Tampa, Florida.
U.S. soybean futures rose after four straight sessions of declines, buoyed by strength in the cash market and by harvest slowdown, traders said.
Corn and wheat futures kept falling on expectations that a huge corn harvest will lead to a glut of grain in the United States, traders said. Corn has fallen for six sessions in a row, its longest losing streak since late July.
Traders noted some bargain buying in soybean futures, which sank this week to their lowest levels since February 2012 before rains knocked farmers out of the fields and brought harvest to a halt.
“Precipitation will be seen across the Midwest over the next two days and this will create some harvest delays,” Sterling Smith, futures specialist with Citi, said in a note to clients.
“Beans continue to be difficult for processors to originate in some areas and this is mildly supportive to the board.” (Reporting By Marina Lopes; Editing by David Gregorio)