* U.S. gasoline stocks rose at three times expected pace
* U.S. dollar strengthens, leading investors away from oil
* OPEC has no plans to raise oil production - Algeria
(Updates with settlement prices)
By Joshua Schneyer
NEW YORK, Oct 7 (Reuters) - Oil prices fell toward $69 a
barrel on Wednesday after U.S. data showed fuel stocks surged
last week in the world's biggest energy consumer, signaling a
recovery in oil demand could take more time.
The Energy Information Administration reported gasoline
stocks leapt 2.9 million barrels last week, nearly three times
the build that analysts had expected.
Distillate stocks -- which include diesel and heating oil
-- rose by 700,000 barrels, more than double the forecast
300,000-barrel build. []
"The inventory numbers are wildly bearish," said Phil
Flynn, analyst at PFGBest Research in Chicago.
"We still have major supply and demand issues," he added.
U.S. fuel stocks remain far above five-year averages, with
gasoline 7 percent above average levels and distillates 30
percent above the norm, government data show.
U.S. crude for November delivery <CLc1> settled 1.9 percent
lower, down $1.31 to $69.57 a barrel, after gaining in the two
previous days. London Brent crude <LCOc1> fell $1.36 to
$67.20.
Oil has rebounded from an 11-week low of around $66 in
late September.
On the bullish side, the EIA reported a decrease in U.S.
crude stocks last week of 1 million barrels, bucking analyst
expectations for a rise of 2.2 million barrels. It also said
petroleum product demand has recovered by 5 percent since the
same time week in 2008, near the height of the financial
crisis.
DOLLAR STRENGTH
Oil prices fell as a strengthening dollar prompted less
investment in crude, which tends to hold its value or rise when
the greenback weakens, as it had in two previous days.
The dollar rose Wednesday, by 0.2 percent against a basket
of currencies <.DXY>, emerging from a 10-day low yesterday
against the euro and an eight-month low against the yen.
The dollar gained on optimism that third-quarter U.S.
corporate earnings reports, which began Wednesday, will show
signs of an economic rebound.
The currency also gained as more large oil producers denied
a report in Britain's Independent newspaper from Tuesday, which
said they were secretly planning to begin pricing oil in
currencies other than the dollar, a step that OPEC-member Iran
took earlier this year. []
Algerian oil minister Chakib Khelil, speaking at a
conference in Buenos Aires, said OPEC would not move away from
pricing crude in dollars any time soon, echoing similar denials
from oil producers Saudi Arabia and Russia on Tuesday.
"The dollar still remains the currency for commodities and
I hope still a reserve currency for a long time to come,"
Khelil told reporters.
He said the dollar may lose some of its appeal as a reserve
currency to other world currencies over the long-term.
[]
NO MORE OPEC CRUDE
Khelil also said that OPEC was unlikely to raise oil
output, which still outstrips demand, when the group next meets
in December.
By cutting its crude exports since late 2008, OPEC "has
managed to tighten up an oversupplied (oil) market," said Brad
Samples, an analyst at Summit Energy in Louisville, Kentucky.
Crude jumped to a record near $150 a barrel in July 2008,
but waning demand and oversupply later pushed oil prices to
near $33 a barrel in December, prompting OPEC to cut output.
Some analysts caution oil prices could slip further from
current levels soon if U.S. corporate earnings disappoint.
"Oil looks like it's on shaky ground as we approach the
U.S. third-quarter (corporate) reporting season. A lot of
near-term price gains have been won off a rebounding equity
market," said Mark Pervan, a commodities analyst at the
Australia & New Zealand Bank.
(Additional reporting Robert Gibbons and Gene Ramos in New
York, David Sheppard in London and Fayen Wong in Perth; Editing
by Christian Wiessner and Lisa Shumaker)
