* Grim U.S. macroeconomic data caps prices
* U.S. oil stocks at more than 20 year high
* Coming up: U.S. ECRI weekly data at 1430 GMT
(Updates prices)
By Emma Farge
LONDON, Aug 20 (Reuters) - U.S. crude oil prices fell below
$74 a barrel after this week's feeble U.S. economic data raised
doubts about the top oil-consuming nation's ability to use up
its highest petroleum inventories in two decades.
U.S. crude prices for September <CLc1> fell 73 cents to
$73.70 a barrel by 1220 GMT on contract expiry day, continuing a
two-session drop.
The more actively traded October contract dipped 76 cents to
$74.01 per barrel while the Brent contract for the same period
was down 68 cents at $74.62.
Oil prices slid to a six-week low of $73.83 a barrel on
Wednesday after data from the Energy Information Administration
showed U.S. oil stocks rose to 1.130 billion barrels in the
previous week -- the highest level in at least 20 years. []
Since then, the already frail U.S. economic recovery
received fresh setbacks after jobless claims rose to a
nine-month high last week and mid-Atlantic manufacturing shrank
in August, alerting the market to the dangers of a stubborn
supply overhang.
"Even measured by the subpar nature of the macro numbers we
have been seeing in recent weeks, Thursday's batch of figures
were particularly disappointing....Excessive gains are getting
rolled back given the "slow-growth" track we seem to be on,"
said Edward Meir at MF Global in a research note.
He added that, for now, "hurricane-related jitters" are
setting an effective floor beneath oil prices but this could
could collapse if no storms enter the oil-rich U.S. Gulf of
Mexico before the end of the season.
The National Hurricane Center said there was only a 10
percent chance that a tropical wave in the western Caribbean Sea
would strengthen into a depression in the next 48 hours.
[]
RANGE-BOUND TRADE
Oil prices have fallen by 10 percent from early August highs
of around $83 a barrel and are now back in the $70-$80 a barrel
range where they have mostly traded since last October.
Some analysts flagged the risk of further losses if the
recovery prospects for the U.S. economy continue to worsen.
"The fundamentals of oil are not pretty...if the poor
macroeconomics force some deleveraging we have to be ready for
the risk of sharp downward corrections," said Olivier Jakob,
trading adviser at Petromatrix.
But for now, technical analysts predict that prices are
stuck within a miniature range between $73-$76 a barrel.
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For a graphic on the technical outlook, see:
http://graphics.thomsonreuters.com/WT/20102008090216.jpg
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Traders will look to the Economic Cycle Research Institute
index due, a measure of future U.S. economic growth, for a fresh
perspective on the demand outlook.
Equities are also likely to give direction as oil price
gains are now showing an unusually high correlation with
equities, analysts said.
European stocks edged higher in early trade on Friday,
halting a sharp two-day retreat. []
(Additional reporting by Alejandro Barbajosa; editing by
Alison Birrane)
