UPDATE 13-Oil slumps on Goldman warning, demand fears

                                
 * Brent seen down at $105 in "coming months" - Goldman
                                
 * IEA says high prices slowing growth in oil demand
                                
 * Coming up: EIA oil data, 10:30 a.m. EDT Wednesday
 (Updates with API oil data result paragraphs 11-17)
                                
 By Robert Gibbons
                                
 NEW YORK, April 12 (Reuters) - Oil fell more than $3 on
Tuesday as Goldman Sachs warned again of a price reversal and
key forecasters said expensive crude could erode demand.
                                
 Oil extended its retreat from 32-month peaks reached early
on Monday, with U.S. crude's 5.8 percent drop from Friday the
biggest two-day percentage loss since May 2010, when the Greek
and wider euro zone debt crises pressured commodities.
                                
 Oil led a broad commodities slump that also reacted to an
upgrade in the severity of Japan's nuclear crisis, which
rattled risk appetite and boosted U.S. Treasuries. [COM/WRAP]
[US/]
                                
 Brent crude for May <LCOc1> fell $3.06 to settle at $120.92
a barrel. The May Brent contract expires on Thursday.
                                
 U.S. May crude <CLc1> fell $3.67 to settle at $106.25.
                                
 "Fear of demand destruction is killing this market. There
is a feeling that the recent rally lifted oil prices to
unsustainable levels," said Phil Flynn, analyst at PFGBest
Research in Chicago.
                                
 Sentiment was also diminished after two Saudi Arabia-based
sources told Reuters that a lack of customer demand caused the
kingdom to lower production after an increase in March to
offset lost Libyan crude. [ID:nLDE73B1J0]
                                
 U.S. oil prices rallied above $113 on Monday, having jumped
from an $83.85 low on Feb. 15 in the wake of the ouster of
Egypt's government and with unrest just beginning to spread in
the region before engulfing Libya in a civil war.
                                
 In its second report in as many days, Goldman Sachs <GS.N>
urged investors to book profits, and traders said many did.
                                
 Goldman expects Brent to fall toward $105 in coming months,
the bank said in a note emailed to clients, after recommending
on Monday that they close its trade on a basket of commodities
that included U.S. crude. [ID:nN12164096] [ID:nLDE73B02E]
                                
 CRUDE STOCKS RISE - API
                                
 U.S. crude oil stocks rose 1.2 million barrels last week,
the American Petroleum Institute industry group said late on
Tuesday. [API/S]
                                
 Crude prices were little changed in post-settlement trading
after the API report.
                                
 Gasoline stocks fell 4.6 million barrels and distillate
stocks dropped by 3.7 million barrels, as refinery use slumped
5.1 percentage points to 78.9 percent of capacity, the API
said.
                                
 A Reuters survey of analysts had forecast crude stocks to
be up 1.0 million barrels, but projected distillate stocks to
be up slightly and gasoline stocks to be down only 900,000
barrels. [EIA/S]
                                
 The U.S. Energy Information Administration's inventory
report is due on Wednesday at 10:30 a.m. EDT (1430 GMT).
                                
 "The draw in refined products is certainly supportive,"
said John Kilduff, partner at Again Capital LLC in New York.
                                
 "The decline in utilization rates looks like a real
retrenchment by (refiners)."
                                
 DEMAND CONCERNS
                                
 High prices are beginning to dent oil demand growth, the
International Energy Agency, an energy policy adviser to
Western consuming nations, said. Slowed economic growth could
cause prices to correct, the IEA said. [ID:nLDE73B0MO]
                                
 OPEC kept its 2011 oil demand forecast steady in its
monthly report, but said the group saw a risk that higher oil
prices could dent demand for transport fuel. [ID:nL9E7F700M]
                                
 A slightly higher demand growth forecast for 2011 came from
the EIA, but it did lower the forecast for 2012. [ID:nWNA5990]
                                
 U.S. retail gasoline demand fell last week, with the
four-week average down against the year-ago period, MasterCard
said in a weekly report. [ID:nEGE7DB018]
                                
 Saudi Arabia pointing to slow demand in deciding to reverse
its recent output hike was treated by investors as another sign
of slack consumption.
                                
 Sources said Saudi Arabia had trimmed production by around
500,000 barrels per day to around 8.5 million bpd due to slow
demand. [ID:nLDE73B0TH]
                                
 Japanese consumption remains in question as economic damage
from last month's earthquake is likely to be worse than first
thought, Japan's economics minister warned. [ID:nL3E7FC092]
                                
 SUPPLY THREATS
                                
 Threats to supply remained as Libya's conflict continued,
as did opposition to current regimes in Yemen, Syria and other
countries in the region.
                                
 France and Britain urged NATO to do more to stop Muammar
Gaddafi's forces from bombarding civilians in Libya, even as
Qatar said it had marketed 1.0 million barrels of crude on
behalf of Libyan rebels. [ID:nLDE73A2B7] [ID:nLDE73B22K]
 (Additional reporting by David Sheppard and Gene Ramos in New
York, Ikuko Kurahone, Dmitry Zhdannikov and Zaida Espana in
London and Chikako Mogi and Risa Maeda in Tokyo; Editing by
Dale Hudson)