UPDATE 9-U.S. crude prices hits 7-month high as inventory drop seen
* U.S. crude stockpiles expected to fall second week in row
* Canada wildfires rage anew, causing oil firms more woes
* Libya deal signals first step in output resumption there
* Bank of America, UBS less optimistic on oil rally
* Coming up: EIA inventory data at 1430 GMT on Wednesday (Adds API data and market reaction in post-settlement trade)
By Barani Krishnan
NEW YORK, May 17 (Reuters) - Oil prices rose for a second straight day on Tuesday, with U.S. futures hitting seven-month highs, on expectations of a drawdown in U.S. crude stockpiles and a new wildfire threat on Canadian oil supplies.
Concerns about the potential for higher Libyan output and apprehension that the market was reaching overbought levels initially restrained the rally.
Prices rose after a Reuters poll of oil analysts forecast U.S. crude inventories likely fell 2.8 million barrels last week, declining for a second straight week. Continued...