UPDATE 1-Brent crude holds above $113 after 4-day drop

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* U.S. crude inventory to rise for 7th week - poll (Adds Saudi oil minister comments, updates prices)

By Florence Tan

SINGAPORE, May 8 (Reuters) - Brent crude held steady above $113 a barrel on Tuesday, recovering slightly from steep losses in the previous four sessions caused by fears that the slowing economies of the United States and the euro zone would reduce oil demand.

Changes in the euro zone political scene after France elected a new leader and Greece's inability to form a new government have shaken an already fragile outlook for the debt-laden region while economic growth sputtered in the United States after jobs creation fell.

Brent crude rose 43 cents to $113.59 a barrel by 0451 GMT. The contract slumped on Monday to $110.34, the lowest intraday price since Jan. 30, but quickly recovered to settle 2 cents lower at $113.16 a barrel. Brent shed 5.4 percent in the last four sessions.

U.S.

crude fell for a fifth day to trade at $97.82, down 12 cents.

"There may have been some investor bargain hunting, with the opinion that prices were oversold after another $3 plunge at the start of trade," ANZ analysts led by Mark Pervan said in a note.

"Wider markets appear to be pricing in the potential for another long-term refinancing operation announcement in Europe, which will likely be supportive for oil markets going forward."

Shares and riskier assets recovered on Tuesday from the previous day's plunge, as sentiment improved on hopes Spain would use public funds to bolster its struggling banks, although wariness remained over Greece.

Brent crude prices were also supported as commercial hedgers, such as shippers, may have bought oil following the $3 slump on Monday, said Masaki Suematsu, a commodity sales manager at Newedge Japan.

"The economic outlook is not so weak as the market is still expecting QE3," Suematsu said, adding that there is also plenty of liquidity to support global markets.

The Federal Reserve is expected to start a third round of government bond buying, or quantitative easing known in markets as QE3, to support the U.S. economy.

U.S. CRUDE STOCKS TO RISE

Higher OPEC oil output and rising inventories are weighing on oil prices.

Top oil exporter Saudi Arabia is pumping at around 10 million barrels per day (bpd), the most in about five months, and is storing 80 million barrels to meet any sudden disruption in supplies, Oil Minister Ali al-Naimi said.

Crude inventory in the United States, already at its highest level since 1990, is forecast to rise for a seventh straight week by 2 million barrels, as supply in Cushing, Oklahoma continued to build ahead of the Seaway pipeline reversal, a preliminary Reuters poll showed on Monday ahead of weekly inventory data.

Data from the U.S. Energy Information Administration released last Wednesday showed crude stocks reached the highest level since 1990 during the week to April 27. Cushing crude stocks were at a record of 42.96 million barrels during the period.

"The tendency for increasing oil stocks will continue for several weeks and this will pressure crude markets," Newedge's Suematsu said, although the contract has strong technical support at $96.30 a barrel, its 200-day moving average.

The weekly inventory report from industry group American Petroleum Institute is due late on Tuesday.

Resumption of talks between Iran and the West over Tehran's nuclear program eased tensions and has reduced the more-than-$10 a barrel risk premium built into oil prices, Suematsu said.

Also, news that Iran is accepting yuan for some of the crude it supplies to China indicate that supply from the OPEC member will continue, he said.

(Editing by Himani Sarkar)

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