* U.S. energy department data confirms big crude stock build
* NYMEX crude futures initially fall $2 then recoup partly
* Investors looking to EU summit Thursday
* Dollar gains after Fitch cuts Portugal rating
(Releads after EIA report, updates prices)
By Jo Winterbottom
LONDON, March 24 (Reuters) - Oil quickly slid $2 a barrel to
under $80 on Wednesday after U.S. energy department data
confirmed a rise in crude stocks that surpassed expectations,
but gasoline demand figures helped stem the price decline.
Sentiment was also undermined earlier by concerns over the
fragility of a global recovery as Portugal's sovereign credit
rating was downgraded, underlining worries Greece's debt
problems could move to other euro zone areas. []
U.S. crude oil futures for May <CLc1> touched a low of
$79.88 a barrel and by 1445 GMT were trading down $1.28 at
$80.63. Crude futures have traded between $69 and $84 so far
this year. London ICE Brent <LCOc1> for May was down $1.13 at
$79.57 after earlier dipping to a low of $78.90.
U.S. crude stockpiles jumped 7.3 million barrels in the week
ended March 19, the U.S. Energy Information Administration (EIA)
said, broadly confirming a 7.5 million barrel build reported by
the American Petroleum Institute (API) on Tuesday. <API/S>
<EIA/S>
"The EIA data essentially mirrors that of API, with gasoline
being the exception. Larger-than-expected builds in crude oil
reduced prices, not to ashes, but to $80," said Jay Levine of
Enerjay LLC, based in Portland, Maine.
Brad Samples at Summit Energy said the build mostly came
from imports and refineries could process more oil as the U.S.
driving season got underway.
"The big build all comes from imports, which rose to their
highest level since September, 2009," he said.
"Refinery utilization rates have been rising along with
import levels, and the rise will probably continue as we head
toward the (U.S.) driving season. We've been eating away at
gasoline stocks," he added.
The EIA said gasoline stocks fell 2.7 million barrels in the
week ending March 19, more than the 1.3 million forecast in a
Reuters poll of analysts.
AT HOME IN THE RANGE?
But Mike Zarembski at Optionsxpress in Chicago said the
market was watching the dollar and European economies and was
unable to take a fundamental spur to break out of current
ranges.
"The market is so entrenched in this trading range -- $77.50
on the downside and $83.50 on the upside -- that no one is
really interested in taking a position either way. Traders have
their minds on other markets such as the U.S. dollar and the
whole European quagmire," he said.
The dollar rose against the euro after Fitch Ratings cut
Portugal's sovereign credit rating by one notch to AA- in a move
which put further pressure on the single currency. []
Data in the euro zone painted a mixed picture on the
economy, with manufacturing activity growing in March at its
highest level since the end of 2006 [] but
industrial orders in January falling, underscoring the fragility
of the economic recovery. []
Still, analysts believe the fluctuations in the dollar will
likely have less impact on crude oil prices as fundamental
concerns come more sharply into focus.
Petromatrix analysts said they would look to the gasoline
crack -- the theoretical premium refiners get for making
gasoline from crude -- for crude price indications this week.
The gasoline crack <RB-CL1=R> touched a high for 2010 around
$14.60 earlier this week and is now just under $13. Demand often
rises going into the U.S. summer as drivers take off on holiday.
"With plenty of stocks and relative values that are
favouring (making gasoline), the U.S. consumer will have to
drive a long way before putting the supply capacity at risk,"
said Petromatrix in a report.
(Editing by Amanda Cooper)
