(Updates prices, analyst comment)
By Santosh Menon
LONDON, Jan 10 (Reuters) - Oil fell sharply to below $95 a
barrel on Thursday as a rise in fuel stocks in top consumer the
United States offset a steep decline in crude supplies.
U.S. crude <CLc1> dropped $1.07 to $94.60 a barrel by 1300
GMT after falling 66 cents a day earlier. London Brent crude
<LCOc1> shed 85 cents to $93.52.
"The flip side of the U.S. crude draw was equally striking
product builds," said Antoine Halff of Newedge Group. "Scratch
the surface, and the headlines look less price supportive."
Supplies of gasoline in the United States jumped 5.3 million
barrels and distillates rose 1.5 million barrels last week, far
exceeding analyst expectations. []
Muting the bearish impact of the data, the U.S. Energy
Information Administration said crude inventories tumbled 6.8
million barrels to the lowest level since October 2004.
Analysts said the weekly stocks data showed a build in
stocks of diesel, mainly used by the U.S. trucking and transport
sector, which could be a forewarning about the wider economy.
"One week does not make a trend, but if diesel demand in the
U.S. starts to weaken, that to me is a warning for the economy
as well," said Mike Wittner, global head of oil research at SG.
Oil is below last week's lifetime high of $100.09 a barrel,
pressured partly by concerns that a U.S. economic slowdown will
erode energy demand.
Investment bank Goldman Sachs said on Wednesday it expected
the world's biggest economy to tip into recession this year.
The Organization of the Petroleum Exporting Countries, which
supplies more than a third of the world's oil, is keeping a
close watch on the economy.
OPEC President Chakib Khelil said on Thursday he expected
demand and prices to be affected if the malaise reached global
proportions.
"We are closely following with interest the evolution of
this crisis which could, if it comes to affect Europe and the
rest of the world, bring about a decline in the development of
the world economy," Khelil said.
Price losses were limited by rising geopolitical tensions in
OPEC producers Iran and Nigeria.
U.S. President George W. Bush warned of "serious
consequences" after Iranian boats made aggressive manoeuvres
towards three American naval ships in the Strait of Hormuz, a
major oil shipping route.
Iran accused Washington of trying to stir tension.
In Nigeria, unknown gunmen attacked six oil ships in the
channel leading to the country's largest oil and gas complex on
Bonny Island, a day after militants said they were targeting a
major offensive at Nigeria's oil infrastructure.
(Additional reporting by Yaw Yan Chong in Singapore and Peg
Mackey in London; editing by James Jukwey)
