* Eyes on U.S. EIA inventory data at 10:30 EDT (1430 GMT)
* Crude stocks up 4.7 mln barrels, dwarf forecast - API
* U.S. housing market shows signs of recovery
(Updates prices)
By Christopher Johnson
LONDON, March 18 (Reuters) - Oil fell from a 2-1/2-month
high towards $48 a barrel on Wednesday after industry data on
Tuesday showed large builds in U.S. crude stocks.
Data from the American Petroleum Institute showed crude
stocks rose much more than expected last week, reflecting poor
demand at refineries and could foreshadow an equally poor set of
numbers from the U.S. Energy Information Administration due
later on Wednesday.
U.S. light crude for April delivery <CLc1> fell 85 cents to
$48.31 a barrel by 1346 GMT. On Tuesday, the contract gained
$1.81 to $49.16, its highest settlement since Dec. 1, 2008.
London Brent crude <LCOc1> slipped 68 cents to $47.58.
Oil has tumbled $100 from a record high of almost $150 last
July as economic meltdown has cut demand for fuel worldwide.
But prices, which sank to levels below $35 a month ago, have
since stabilised in the $40 to $50 range, as producer group OPEC
has targeted output cuts of 4.2 million barrels per day (bpd)
since last September and vowed at a meeting on Sunday to achieve
higher compliance from members to reduce production.
Mike Wittner, global head of oil research at Societe
Generale, said oil prices were now at around the top of the
range seen over the last three months.
"I don't see any reason fundamentally why we should break
out of this range to the upside," he said. "The picture remains
the same: weak economy, weak oil demand."
Oil's gains on Tuesday were boosted by better-than-expected
U.S. housing data and inflation, which drove U.S. stocks higher
and lifted investors' risk appetite.
AWAITING DATA
Broker MF Global said in its daily note to clients that
while Tuesday's U.S. housing figures had been supportive, "it
will take far more than one set of monthly figures to turn
sentiment (let alone the economy) around.
"In view of the fact that OPEC has decided not to put
through any additional cuts, we find it hard to rationalise a
sustained push beyond this mark," it said.
"The combination of all these variables makes the case that
some length should be taken off the table here, as the energy
markets have done too much, too soon given the prevailing
fundamental and technical backdrops."
The American Petroleum Institute (API) said in its inventory
report on Tuesday that domestic crude stocks rose 4.7 million
barrels last week to 349.9 million, dwarfing forecasts for an
increase of just 1 million barrels. []
The U.S. Energy Information Administration (EIA) will issue
stock data later on Wednesday, with crude oil inventories seen
up last week as refinery demand remained tepid and imports
increased a little, a Reuters poll showed. []
Government data on Tuesday showed U.S. housing starts and
permits rebounded in February from record lows, rising for the
first time in 10 months and offering a glimmer of hope for the
recession-hit economy. []
Still, analysts were cautious about whether the housing data
marked the start of a turnaround for the world economy and said
the market would keep a close eye on further data to gauge how
the U.S. economy was faring.
Data due to be released later on Wednesday included U.S.
core consumer price index for February as well as results of an
interest rate meeting held by the U.S. Federal Open Market
Committee.
(Additional reporting by Fayen Wong in Perth; editing by Keiron
Henderson)
