UPDATE 6-Oil drops 3 percent on economic gloom

                                
 * U.S. jobless claims, Wal-Mart results feed economic
gloom
                                
 * U.S. crude stockpiles high
                                
 * Russia gas row, Mideast violence, OPEC cuts help support
                                
 (Updates prices, details, changes dateline previous
LONDON)
                                
 NEW YORK, Jan 8 (Reuters) - Oil fell 3 percent on Thursday
as deepening economic gloom and soaring crude inventories in
the United States eclipsed geopolitical tensions that have put
world supplies at risk.
                                
 The losses add to Wednesday's 12 percent drop, which marked
the biggest daily percentage decline in the price of crude oil
in more than seven years.
                                
 "This morning crude was trying to rally a bit, but more
(economic) figures kept coming out from the U.S. and they were
very bearish indeed," said Sucden trader Rob Montefusco.
                                
 U.S. crude for February delivery <CLc1> fell $1.30 to
$41.33 a barrel by 11:47 am EST (1647 GMT) while London Brent
crude <LCOc1> fell $1.21 to $44.65.
                                
 Oil prices have dropped more than $100 a barrel since July
as a global financial crisis cuts consumer and business energy
demand, threatening to shrink total world oil usage for the
first time in 25 years.
                                
 On Thursday, a U.S. government report showed the number of
people remaining on jobless rolls last week rose to a 26-year
high, even as new claims for unemployment benefits slipped.
[ID:nN08526969]
                                
 Adding to the economic gloom, Wal-Mart Stores Inc <WMT.N>,
which accounts for a tenth of U.S. retail spending, reported a
disappointing sales performance in December and cut its
earnings outlook. [ID:nN08485027]
                                
 Oil had taken a battering Wednesday after the U.S. Energy
Information Administration's weekly report showed crude stocks
up 6.7 million barrels, more than seven times the
900,000-barrel increase analysts expected. [EIA/S]
                                
 "Brent is done going under $40, but WTI is a different
animal altogether...crude stocks in the Midwest are very high
because Cushing is a landlocked base with pipes that only go in
one direction," Christopher Bellew of Bache Financial said.
                                
 SUPPLY RISKS
                                
 Prices had gained some support from violence in Gaza,
widening natural gas supply disruptions due to a row between
Russia and Ukraine, and mounting evidence of OPEC's compliance
with production cuts.
                                
 Three rockets fired from Lebanon struck northern Israel on
Thursday, slightly wounding two people and prompting the Jewish
state to respond with artillery fire, officials said.
[ID:nL8463036]
                                
 While the conflict does not directly threaten any oil
supplies, Middle East unrest can bolster prices because
countries in the region pump about a third of the world's oil.
                                
 Russia and Ukraine failed to resolve a gas row at a meeting
in Moscow but will continue talks to end the dispute which has
choked off supplies to Europe, a senior Ukrainian gas official
said on Thursday. [ID:nL7323048]
                                
 The dispute has cut heating to hundreds of thousands of
people across the Balkans and hit supplies as far west as
France and Germany as Europe faces freezing temperatures.
                                
 Signs that members of the Organization of the Petroleum
Exporting Countries (OPEC) are implementing the group's
biggest-ever output cuts grew this week after Kuwait and Iran
told customers of bigger January supply curbs. [ID:nSP184486]
 (Reporting by Richard Valdmanis; Additional reporting by Chris
Baldwin in London, Jennifer Tan in Singapore; Editing by
Marguerita Choy)