(Updates prices, details, changes dateline from LONDON)
By Richard Valdmanis
NEW YORK, April 8 (Reuters) - Oil prices eased on Tuesday,
pressured by profit-taking, gains in the dollar and
expectations that a looming government report would show
another increase in U.S. crude stockpiles.
U.S. crude <CLc1> fell by 30 cents to $108.79 a barrel by
1700 GMT after refinery trouble in Europe spurred a $3 jump on
Monday. London Brent crude <LCOc1> shed 36 cents to $106.78 a
barrel.
"Looks like dollar strength helping pressure crude. The
crude market failed to take out earlier highs and is running
into some profit-taking," said Tom Bentz of BNP Paribas
Commodity Futures Inc.
The dollar rose against a basket of currencies Tuesday on
growing views the economic slump in the United States could
spill over into other countries and prompt their central banks
to cut interest rates. []
A weak dollar tends to raise prices for commodities
denominated in the currency by boosting non-U.S. spending power
and by attracting investors seeking an inflation hedge, while a
stronger dollar can push commodities prices down.
Economic turmoil has also tempered crude's record rally in
recent months by dimming prospects for global energy demand
growth, analysts said.
The U.S. Energy Information Administration said on Tuesday
that U.S. gasoline demand is likely to contract this summer for
the first time since 1991 -- a reflection of high prices and
economic weakness in the world's biggest consumer.
Adding to oil's softness Tuesday, analysts said they
expected a report from the EIA due Wednesday to show a
2.2-million-barrel increase in nationwide crude stockpiles due
to higher import levels. []
Oil prices got a big boost on Monday after a fire at a
refinery in Finland delayed the restart of a key diesel-making
unit, threatening to tighten already tight European diesel
inventories.
London's gas oil futures <LGOc1>, closely related to
diesel, hit a new peak of $1,017 a tonne Tuesday before easing
slightly to $1,006.50.
U.S. RAISES PRICE FORECAST
The EIA said Tuesday that despite softening demand, the
world oil market would remain tight this year as production
increases from both the Organization of the Petroleum Exporting
Countries (OPEC) and non-OPEC countries will likely fall short
of projections.
For the first time, it raised its full-year forecast for
U.S. light crude to more than $100 a barrel and said a slowing
U.S. economy would not be enough to check soaring oil demand.
[]
OPEC has said inventories are ample and has so far rejected
calls from consumers for more oil.
The group's President Chakib Khelil reiterated on Tuesday
that high oil prices were not caused by a shortage of crude and
he saw no need for OPEC to pump more.
"Nothing has changed to change at least my view of the
situation, which is there is really no need for increasing the
supply," he told reporters on the sidelines of a conference.
OPEC's second largest oil producer, Iran, has been locked
in a long-standing row with the West over its nuclear program,
which oil investors fear could lead to supply disruptions.
(Additional reporting by Bate Felix in London and Luke
Pachymuthu in Singapore; Editing by Christian Wiessner)
