* Oil futures fall, dollar gains on euro zone worries
* Analysts see downside underpinned by Libya fighting
* Violence escalates, Gaddafi strikes in rebel heartland
(Recasts, updates prices; changes byline, dateline, previously
LONDON)
By Gene Ramos
NEW YORK, March 10 (Reuters) - Oil prices tumbled on
Thursday as the dollar strengthened on renewed Euro zone credit
worries, though fears remained that prolonged conflict in Libya
could do long-lasting damage its oil infrastructure.
Data showing that China, the world's second largest oil
importer, unexpectedly posted the largest trade deficit in
seven years also weighed on oil prices, analysts said.
[]
U.S. crude for April delivery <CLc1> fell faster than its
counterpart Brent crude, falling $2.96 to $101.42 a barrel.
Data showing new U.S. jobless claims rose last week and the
country's trade deficit widened in January sparked economic
growth worries and weighed on U.S. crude. []
U.S. crude's losses extended from Wednesday, when data
showed crude inventories rose well more than expected last
week, with stocks at the key Cushing, Oklahoma, delivery hub
hitting a record. []
In London, April Brent crude <LCOc1> dropped $1.75 to
$114.19 a barrel.
Brent's premium against U.S. crude again shot up, rising to
more than $13, after posting above $11 on Wednesday. []
The premium hit a record above $17 last week.
Investors watch the changing fortunes of both contracts as
they trade heavily on the spread between them.
The euro fell against the dollar after rating agency
Moody's downgraded Spain's credit, sparking negative sentiment
towards struggling sovereign borrowers in Europe. []
CHINA DATA SPURS GROWTH WORRIES
China suffered a $7.3 billion trade deficit in February as
the Lunar New Year holiday slowed exports and spurred anxieties
about global economic growth, though economists said the sudden
drop was likely to be temporary. []
But China's crude oil imports rose to the third highest
level on record on a daily basis as refiners ramped up
operations despite a lull in demand lull during the holidays.
[]
In Libya, state television said government forces had
cleared Ras Lanuf of "armed gangs," a reference to rebels, but
rebel soldiers denied the eastern oil town had fallen to
Muammar Gaddafi's troops. []
"The large explosions and enormous columns of smoke from
storage tanks and other facilities in Ras Lanuf, close to the
Es Sider terminal, are perhaps more than merely symbolic,"
Barclays Capital oil analysts headed by Paul Horsnell said.
"They represent a final fading of any residual realistic
hope that the outage of Libyan oil could prove to be anything
other than prolonged."
An official from the Libyan oil company AGOCO told Reuters
the company was making arrangements to market oil directly to
foreign buyers, instead of through its state-owned parent,
National Oil Corp. []
The port of Brega has run out of crude oil stocks, forcing
crude tankers to cancel shipments or travel to Saudi Arabia, a
source told Reuters. []
PRESSURE MOUNTS ON LIBYA
International pressure continued to mount on Libya after
Russia said it would ban all weapons sales to the North Africa
nation, while Germany ordered a freeze on bank accounts held by
the Libyan central bank and the Libyan Investment Authority.
Confirming previous non-Libyan estimates, Shokri Ghanem,
chairman of Libya's National Oil Corp, said production had been
cut to about half a million barrels per day from 1.6 million
bpd by the war, as many foreign and local workers left
oilfields. []
To cool down market anxiety, Saudi Arabia has increased
production to 9 million bpd, almost 1 million bpd above its
OPEC target. The kingdom says it holds spare capacity of 3.5
million bpd.
Still, an OPEC member said Wednesday it saw no need for an
emergency meeting to discuss raising output.
(Additional reporting by Robert Gibbons in New York; Zaida
Espana in London; Alejandro Barbajosa in Singapore; Editing by
Walter Bagley)
