* Tropical Storm Alex path seen less threat to oil output
* U.S. consumer spending, incomes rise in May-supports oil
* Coming up: API oil inventory data on Tuesday
(Updates prices, market activity)
NEW YORK, June 28 (Reuters) - Oil prices fell on Monday as
concerns eased that Tropical Storm Alex will threaten energy
production in the Gulf of Mexico, which offset support from a
report showing U.S. consumer spending rose more than expected
in May.
U.S. crude prices fell back after reaching an almost
eight-week high above $79 earlier in the session. They settled
at a seven-week high on Friday when prices jumped more than 3
percent on concerns that stormy weather would disrupt
supplies.
Over the weekend, Alex became the first named storm of the
2010 Atlantic hurricane season. Forecasters, who expect an
active season, said Alex could become a hurricane on Tuesday.
At 1:52 p.m. EDT (1752 GMT), U.S. crude for August <CLc1>
was down 80 cents at $78.06 a barrel. It traded as low as
$77.72 and as high as $79.38, the highest intraday price since
May 6.
August Brent crude <LCOc1> was down 62 cents at $77.50.
"It's profit-taking after the near two-month high and the
failure to reach the $80 level," said Carsten Fritsch, an
analyst at Commerzbank.
"The market is oversupplied. Given the high level of
stockpiles, any supply disruptions could be met easily as long
as they are short-lived."
STORM DISRUPTS SOME SUPPLY
While concern over Alex's weather threat was easing, it has
caused some disruption to supplies.
Mexico closed two of its main Gulf of Mexico oil exporting
terminals on Sunday as Alex moved over the Yucatan peninsula,
the government said. []
Shell Oil <RDSa.L> reduced an undisclosed amount of output
from two offshore platforms, and BP <BP.L><BP.N> evacuated some
personnel from three platforms. Other companies evacuated
nonessential offshore workers as a precaution. []
The U.S. National Hurricane Center said on Monday that Alex
was expected to hit near the Texas-Mexico border early
Thursday. []
Most weather models project a north-of-the-border hit, but
the models were still shifting. Earlier Monday, most models
forecast the storm would hit south of the border.
Refineries in Corpus Christi, Texas, would be closest to
the projected storm path as the threat to the giant
petrochemical and refining complex in the Houston area lessened
on Monday.
The U.S. National Oceanic and Atmospheric Administration
forecasts 14 to 23 named storms for this year's season, with
eight to 14 developing into hurricanes. Three to seven of those
could be major Category 3 or above hurricanes. []
OPEC Secretary General Abdullah al-Badri on Sunday put the
"inventory overhang" and oil held in storage on tankers at
about 244 million barrels -- equal to almost three days of
global oil demand. []
"Many changes can still occur in the next 48 hours," said
Olivier Jakob, an analyst at Petromatrix.
"But we start the week with a storm picture that should be,
if still a concern, a lesser one than at the end of last
week."
CONSUMER SPENDING RISE
U.S. consumer spending rose slightly more than expected in
May even as savings touched their highest level in eight
months, a government report showed. []
After seesawing early, U.S. stocks edged up, helped by the
consumer spending report, as equities tried to rebound from
last week's losses. [] But markets remained edgy on caution
about global economic recovery.
The euro fell broadly as potential funding tensions in
Europe this week weighed on the single currency. The dollar
index <.DXY>, measuring the greenback's strength against a
basket of currencies, strengthened.
A stronger dollar can pressure oil prices, both by making
the dollar-denominated commodity more expensive to consumers
using other currencies and by moving money out of energy
markets and into foreign exchange markets.
(Additional reporting by Alex Lawler in London and Alejandro
Barbajosa in Singapore; editing by Jim Marshall)
