* Oil weak on bearish API crude stocks data
* Upbeat economic data seen largely factored into oil
prices
* Oil above $70 oil deemed strong on current fundamentals
By Ramthan Hussain
SINGAPORE, Aug 26 (Reuters) - Oil extended losses below $72
on Wednesday after sliding 3 percent from its highest since
last October a day ago, hit by industry figures showing a hefty
rise in U.S. crude stocks and overshadowing upbeat economic
data.
Investors also viewed prices touching 10-month highs near
$75 on Tuesday, capping oil's jump of 65 percent this year, as
a good reason to take profits.
U.S. crude for October <CLc1> lost 16 cents to $71.89 a
barrel by 0316 GMT, after falling $2.32 on Tuesday, or the
sharpest percentage drop since Aug. 14.
Brent crude <LCOc1> shed 13 cents to $71.69 a barrel after
losing $2.44 the previous day.
"A lot of people are expecting a build in crude stocks
because last week's draw was large," said Tony Nunan, risk
manager at Tokyo-based Mitsubishi Corp.
"People are holding stocks offshore and sooner or later
these would show in crude stocks in the U.S."
American Petroleum Institute (API) data showed an
unexpected 4.3 million-barrel build in U.S. crude stocks last
week, confounding analysts' expectations for a
1.1-million-barrel fall, and coming after the
8.4-million-barrel drop the week before. []
Gasoline stocks fell 1.8 million barrels, the API said,
more than the 1-million-barrel drop predicted in the Reuters
poll, while distillates declined 146,000 barrels, versus
forecasts for a 300,000-barrel rise.
Nunan noted that while the figures from industry body API
have occasionally diverged from those of the government Energy
Information Agency (EIA), due out at 1430 GMT on Wednesday, the
two have been consistent for the previous two weeks.
The drop in crude prices weighed on commodity-linked
currencies such as the Australian and Canadian dollar, while
the U.S. dollar edged up, supported by better-than-expected
economic data.
Oil had surged in earlier U.S. trade after reports showed
increased consumer confidence and higher home prices in the
world's top energy consumer, adding to a string of encouraging
economic indicators, and Wall Street's jump to the highest
levels since October's plunge [].
"The economic data is important, but a lot of the positive
economic figures had been built into the prices," said Nunan.
"$74 is a strong crude price," he said, adding that the
market was already at levels most people were expecting for the
end of the year, by when the world is expected to be seeing
real economic growth.
Analysts are looking at whether Chinese demand will be
strong enough to pull global oil supply demand out of its rut.
China's implied oil demand rose 3.5 percent last month
against a year earlier, its fourth-straight increase, as
refiners ramped up production, offering hope that its economic
growth is reviving energy consumption.
China's growth may exceed 10 percent in first-quarter 2010,
with near-term monetary policy likely to remain loose to
support the recovery, a government researcher said on
Wednesday, despite Premier Wen Jiabao's warning that the
economy faces new difficulties, including trouble boosting
consumption.
(Editing by Clarence Fernandez)
