UPDATE 9-Oil falls as flu adds to demand concerns

                                
 * Flu outbreak continues to spread
                                
 * Investors await API inventory report
 (Updates prices, paragraph 2)
                                
 NEW YORK, April 28 (Reuters) - Oil prices fell on Tuesday
on concerns the swine flu outbreak could further depress fuel
demand, already hard hit by the global financial crisis.
                                
 U.S. crude oil <CLc1> settled 22 cents lower at $49.92 a
barrel, off earlier lows of $48.55. London Brent <LCOc1> fell
33 cents to $49.99 a barrel.
                                
 The new strain of swine flu virus that has killed up to 149
people in Mexico has spread to more countries, including Israel
and New Zealand, raising the specter of a pandemic and hurting
financial markets. [ID:nLS835518]
                                
 The flu has hit airline stocks on expectations travel will
be curtailed, and analysts warned jet fuel demand may slump,
citing the drop in consumption that corresponded to the SARS
epidemic in 2003. [ID:nN27529438]
                                
 "Prices remain in a bit of a swoon as market participants
fret that a potential influenza pandemic might prove fatal to
the frail signs of recovery just beginning to show," said Mike
Fitzpatrick, vice president at MF Global in New York.
                                
 Oil demand has already tumbled due to the global economic
crisis, which has sent prices off record highs over $147 a
barrel in July. Some industry experts said that with demand
already depressed, the effects of the swine flu could be muted
compared with SARS.
                                
 "This time around, demand for fuel has already been cut to
the bare bones and therefore propensity for cutting demand
further is somewhat limited," said Nauman Barakat. senior vice
president at Macquarie Futures USA.
                                
 Gains on Wall Street limited oil's losses.
                                
 U.S. stocks rose as housing and consumer confidence data
fueled hopes a recession was easing, offsetting concerns that
major banks may need to raise more money. [ID:nN28334784]
                                
 Data showed U.S. house prices tumbled nearly 19 percent in
February, but for the first time since October 2007 the decline
was not a record, suggesting the housing market might be closer
to a bottom. [ID:nN28297929]
                                
 Analysts polled by Reuters ahead of weekly U.S. inventory
data forecast crude stocks in the world's top consumer rose
again last week due to slumping demand, while distillate stocks
were also seen rising. Gasoline inventories were expected to
have fallen. [ID:nN28541798]
                                
 U.S. crude stocks were seen rising 2.1 million barrels in
the week to April 24, according to the poll, taken ahead of
data from the American Petroleum Institute to be released later
Tuesday and U.S. government data on Wednesday.
 (Reporting by Matthew Robinson, Gene Ramos, and Robert Gibbons
in New York; Joe Brock in London; editing by Jim Marshall)