Oil falls third day after Fed says economic growth faltering

                                
 * Fed signals U.S. interest rates to remain near zero
                                
 * Coming Up: U.S. durable goods for May; 1230 GMT
                                
 * For a technical view, click: [ID:nSGE65M0B1]
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, June 24 (Reuters) - Oil fell for a third day,
trading near the lowest levels since mid June, after the U.S.
Fed said the pace of U.S. economic recovery is faltering.
                                
 "What we see is a market that is still cautious about
economic recovery," said Toby Hassall, an analyst at CWA Global
Markets in Sydney. "That feeds into oil demand prospects."
                                
 In a further sign that supply continues to outpace
consumption, U.S. crude inventories unexpectedly gained 2
million barrels last week, according to a government report on
Wednesday, while data showed new home sales fell at a record
pace in May.
                                
 U.S. crude for August <CLc1> fell as much as 42 cents to
$75.93 a barrel and was down 20 cents at $76.15 at 0048 GMT.
ICE Brent slipped 12 cents to $76.15.
                                
 Front-month U.S. crude reached the highest price since the
beginning of May earlier this week, near $79, after China
increased the flexibility of the yuan exchange rate.
                                
 But prices on Wednesday touched $75.17, the lowest since
June 15. They have still recovered more than 18 percent from
their May 20 trough below $65 and are about $11 lower than
their early-May 19-month peak above $87.
                                
 "Equity markets and oil markets have been forward looking,"
Hassall said. "They have been pricing in a recovery in both the
U.S. and global economies, but we are just not seeing enough
evidence of improvement to really push us higher."
                                
 Sales of new U.S. homes dropped a record 32.7 percent in
May to the lowest level in at least four decades as the impetus
from a popular tax credit faded, a report showed on Wednesday.
[ID:nN23209668]
                                
 The gloomy report was the latest to imply the U.S.
economy's recovery from the steepest downturn since the 1930s
might be losing strength.
                                
 In a Wednesday statement at the end of a two-day meeting,
the Fed scaled back its assessment of the pace of recovery,
taking note of pockets of weakness, and also issued a
cautionary note about volatile financial markets in light of
Europe's debt woes.
                                
 Japan's Nikkei average fell 0.2 percent on Thursday,
tracking U.S. stocks, which zigzagged and closed mostly lower
on Wednesday after the Fed issued its monetary policy
statement, suggesting interest rates will remain near zero
longer than expected. [MKTS/GLOB] [.T]
                                
 The Paris-based International Energy Agency on Wednesday
said crude supplies would be comfortable for five years,
further stoking bearish sentiment in the oil market.
[ID:nLDE65M0P5]
                                
 U.S. gasoline inventories last week fell by 800,000
barrels, with demand over the past four weeks up 1.2 percent
over the comparable period last year. Distillate stocks rose by
300,000 barrels, while demand jumped 12 percent. [EIA/S]
                                
 A tropical wave to the south of Cuba had a 30 percent
chance of becoming a tropical cyclone over the next two days,
according to the U.S. National Hurricane Center. Storms could
complicate cleaning efforts and curb oil production in the Gulf
of Mexico.
                                
 For graphics U.S. Gulf of Mexico offshore crude output and
self-sufficiency:
                                
 http://graphics.thomsonreuters.com/10/US_DRL0610.gif
                                
 http://graphics.thomsonreuters.com/10/US_OFSHRD0610.gif
 (Editing by Ed Lane)