* 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, adds intraday low in paragraph 2)
By Emma Farge
LONDON, Aug 20 (Reuters) - Oil fell below $74 a barrel on
Friday 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 for September <CLc1> fell 97 cents to $73.46 a
barrel by 1310 GMT on contract expiry day. It traded as low as
$73.24 intraday, the lowest since July 7.
The more actively traded October contract <CLc2> dipped 69
cents to $74.08 a barrel, while the Brent <LCOc1> contract for
the same period was down 68 cents at $74.62.
Data from the U.S. Energy Information Administration on
Wednesday showed U.S. oil stocks rose to 1.130 billion barrels
in the previous week -- the highest level in at least 20 years.
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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
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.
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RANGEBOUND TRADE
Oil prices have fallen by more than 10 percent from early
August highs of around $83 a barrel and are now back in the
$70-$80 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, 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 fell for a third day on Friday on concern
about the effect of an economic slowdown on corporate earnings.
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(Additional reporting by Alejandro Barbajosa; editing by Alison
Birrane and Sue Thomas)
