* Oil falls on weaker U.S. demand outlook
* BP shuts two oil and gas pipelines in Georgia
(Updates prices, adds comments from Iran)
NEW YORK, Aug 12 (Reuters) - Oil fell to $113 a barrel on
Tuesday after government data showed the steepest decline in
U.S. crude demand in 26 years, adding to mounting concerns
about global consumption.
U.S. oil demand during the first half of 2008 fell by an
average 800,000 barrels per day (bpd) compared to the same
period a year ago, the biggest volume decline since 1982, the
Energy Information Administration reported. []
The report came after data released on Monday showed July
crude imports by No. 2 oil consumer China fell unexpectedly by
7 percent to a seven-month low in the steepest monthly drop
since January 2005 as refiners balked at soaring crude costs
amid lagging domestic fuel prices.
U.S. crude <CLc1> settled down $1.44 at $113.01 a barrel,
after falling to $112.31 earlier, the lowest level since May 2.
London Brent crude <LCOc1> fell $1.52 to settle at $111.15.
"The EIA reported the biggest six-month drop in 26 years,"
said Kyle Cooper, analyst for IAF Advisors. "It takes a lot of
the bullish arguments away, but $113 is still not cheap."
High fuel prices and wider economic problems have sent oil
off a record over $147 a barrel hit on July 11 as demand in the
United States and other developed economies falters.
The EIA also lowered its global oil demand growth forecast
by 80,000 bpd in 2008 and 370,000 bpd in 2009, with the U.S.
demand forecast for this year cut by 70,000 bpd and by 160,000
bpd in 2009.
In a separate report released on Tuesday, the International
Energy Agency left its oil demand growth outlook virtually
unchanged for this year but raised its 2009 forecast slightly.
However, the IEA cut its estimate for 2008 demand for oil
from OPEC and predicted supplies would grow. []
U.S. retail gasoline demand fell 3.8 percent last week
versus year ago levels, MasterCard Advisors reported, even as
pump prices began to ease from record highs. []
Growing demand from China and other emerging economies
inspired a six-year rally that sent oil up sevenfold at its
peak, with additional strength this year coming from investors
buying oil as a hedge against the weak dollar and inflation.
GEORGIA DISRUPTIONS
The gloomy demand picture outweighed concerns about supply
disruptions caused by the conflict between Georgia and Russia.
Russian President Dmitry Medvedev ordered a halt to
military operations in Georgia on Tuesday but Tbilisi cast
doubt on the announcement, saying Moscow was still bombing
towns and villages. []
BP Plc <BP.L> closed an oil pipeline and a natural gas
pipeline running from its Caspian Sea fields through Georgia
but neither pipeline had been damaged by recent fighting, the
company said. []
A third BP pipeline that runs through Georgia, the
850,000-barrel-per-day Baku-Tblisi-Ceyhan oil pipeline, was
shut last week following an explosion in Turkey.
Iran's OPEC governor Muhammad Ali Khatibi said OPEC should
trim its oil output if demand continues to fall in slowing
industrialised economies. []
The producer group next meets in September to decide on
output policy.
A Reuters poll of analysts ahead of weekly U.S. inventory
data due out on Wednesday forecast crude stocks fell by 200,000
barrel last week, gasoline stocks fell by 2.1 million barrels,
and a 1.9 million barrel build in distillates. []
(Reporting by Matthew Robinson, Robert Gibbons and Gene Ramos
in New York, Ikuko Kao in London and Chua Baizhen in Singapore;
Editing by Christian Wiessner)
