* EIA data shows U.S. crude stockpiles rise 7.2 mln bbls
* U.S. equities drop, pressuring oil prices
* OPEC says it may cut oil production further
(Recasts, updates throughout)
By Rebekah Kebede
NEW YORK, Feb 4 (Reuters) - Oil slipped below $41 a barrel
on Wednesday after the U.S. stock market fell and a government
report showed a larger-than-expected build in U.S. crude
inventories.
U.S. light crude for March delivery <CLc1> fell 50 cents to
$40.28 by 2:40 p.m. EST (1940 GMT), off the session high of
$41.92. London Brent <LCOc1> rose 17 cents to $44.25.
"The pull back seems to coincide with the stock market
turning lower, but crude is still holding around $40, which in
light of the bearish DOE (U.S. Department of Energy) report is
pretty impressive," said Stephen Schork, editor of the Schork
Report in Philadelphia.
U.S. equities dropped on investor concern over a financial
rescue plan, reversing gains from earlier in the day on a
slowdown in the rate of job losses in the U.S. services
sector.[]
The U.S. Energy Information Administration, the DOE's
statistical arm, reported crude inventories rose 7.2 million
barrels last week to an 18-month high of to 346.1 million
barrels, extending a stretch of builds as demand wanes under
the weight of an economic slowdown. []
Supplies of crude at the New York Mercantile Exchange's
delivery point in Cushing, Oklahoma, jumped 800,000 barrels to
another record high of 34.3 million barrels.
"This is a crude glut of epic proportions. With the big
build in Cushing, the question is do they have any other place
to put oil? We are absolutely swimming in crude," said Phil
Flynn, an analyst at Alaron Trading in Chicago.
The EIA data was similar to a report by the American
Petroleum Institute (API) on Tuesday showing that U.S. crude
oil stocks jumped 8.1 million barrels last week. Oil traders
and analysts generally consider the API report to be less
credible than EIA data.
"In the past, people have discounted the API report. Maybe
it shows people should be paying more attention to it," Flynn
said.
OPEC THREATS LIMIT LOSSES
Oil's losses were limited by signals from the Organization
of the Petroleum Exporting Countries that it may cut oil
production further in an attempt to bolster the market.
OPEC, worried that the global economic downturn is reducing
oil demand and pressuring prices, has promised to reduce oil
production by a total of 4.2 million barrels per day (bpd) from
levels seen in September.
OPEC's president said on Tuesday the 12-member group could
remove more oil from the market if needed to boost prices.
"OPEC has to cut some more and maybe we'll see a massive
tightening in the second quarter when those (cuts) kick in and
supplies in floating storage are flushed out," said Kyle
Cooper, director of research at IAF Advisors in Houston.
Oil has plummeted by more than $100 since hitting a record
near $150 a barrel in July last year as the global downturn has
weighed on demand for fuel.
(Additional reporting by Tim Gardner and Edward McAllister in
New York and Christopher Johnson Joe Brock in London; Editing
by Marguerita Choy)
