UPDATE 4-Oil slips below $67 on weak US housing data

                                
 * Data could show US crude stocks up for 4th straight week
                                
 * Oil retreats after housing, producer price data
                                
 * Growth of Hurricane Bill being carefully monitored
                                
 
                                
 (Updates after U.S. economic data)
                                
 By Joe Brock
                                
 LONDON, Aug 18 (Reuters) - Oil pared gains and stood below
$67 a barrel on Tuesday as weak headline U.S. housing data
renewed doubts over the pace of economic recovery in the world's
largest energy user.
Investors were also awaiting weekly U.S. fuel inventory
reports due later on Tuesday and Wednesday, expected to show
crude stockpiles have risen for the fourth straight week.
                                
 U.S. crude for September delivery <CLc1> was up 12 cents at
$66.87 a barrel by 1340 GMT, off an earlier high of $67.80.
London Brent crude for October <LCOc1> was down 35 cents at
$70.19.
                                
 U.S. stock market futures pared gains after a government
report said on Tuesday new U.S. housing starts and permits
unexpectedly fell in July, increasing fears that talk of
economic recovery may have been overdone. [ID:nN17348766]
                                
 Meanwhile, U.S. producer prices fell by a
larger-than-expected amount in July and notched a record decline
compared with a year earlier as the U.S. recession continued to
keep inflation at bay. [ID:nN18415103]
                                
 "The housing starts were a bit disappointing, but the
inflation number came in better than expected...I think we are
going to be in consolidation mode. There's some profit-taking
going on right now," said John Spinello, chief treasury
strategist at Jefferies & Co in New York.
                                
 Dan Flynn, analyst at PFGBest Research in Chicago, said:
"The PPI number and the housing data helped push crude lower."
                                
 Oil investors will now turn their focus to inventory data.
                                
 The release of weekly API fuel stocks data at 2030 GMT will
be followed by U.S. government figures from the Energy
Information Agency on Wednesday with analysts expecting more
signs of weak U.S. demand.
                                
 
                                
 INVENTORIES
                                
 A preliminary Reuters poll of analysts predicts crude stocks
rose by 1 million barrels, as higher imports offset a slight
increase in refinery activity.
                                
 Distillate stocks were seen up 400,000 barrels and gasoline
stocks down 1.4 million barrels. [EIA/S]
                                
 The previous session's sell-off in oil and equities markets
was prompted by concerns over the pace of global recovery.
                                
 U.S. equities suffered their worst loss in seven weeks on
Monday while Chinese shares saw their biggest daily percentage
drop in nine months.
                                
 Oil investors continued to monitor the growth of Hurricane
Bill, the first of this year's season, which might disrupt Gulf
of Mexico oil and gas production.
                                
 Hurricane Bill was expected to strengthen to a major
category 3 storm by Wednesday, while the remnants of Tropical
Storm Ana dissipated without threatening the U.S. Gulf oil
patch, the U.S. National Hurricane Center said. [ID:nN17358071]
                                
 Energy markets are jittery over Gulf storms because the
region produces a quarter of U.S. oil and 15 percent of its
natural gas.
 (Editing by James Jukwey)