* Rising prices raise prospect of demand destruction
* Portugal asks for EU help, following Greece and Ireland
* Coming Up: ECB rate decision 1145 GMT, US jobless 1230 GMT
* Technicals: Brent to retrace to $119.79/bbl []
(Updates prices, rewrites throughout, previously SINGAPORE)
By Zaida Espana
LONDON, April 7 (Reuters) - Brent crude futures dipped on
Thursday after five days of gains, slipping under $122 a barrel
on concern that strong prices will crimp demand and as central
banks show signs of worry about inflation.
Brent crude <LCOc1> shed 31 cents to $121.99 a barrel at
0814 GMT. It hit a 2-1/2-year high above $123 on Wednesday as
violence in the Middle East propelled prices higher.
U.S. crude futures <CLc1> gave up 2 cents to $108.81 a
barrel, after touching $109.15 on Wednesday, their highest level
since September 2008.
Focus is on the European Central Bank as it meets later,
with analysts polled by Reuters expecting an increase in
interest rates of 25 basis points from the record low of 1.0
percent. [] []
"At current crude oil prices, the risk is turning more and
more to the amount of potential demand destruction,"
Petromatrix's Olivier Jakob said.
Oil prices slipped even after rebels said Muammar Gadaffi
damaged a pipeline connecting oilfields to the port town of
Marsa el Hariga, with analysts noting the supply disruptions may
have already been priced in. []
Euro zone debt worries and inflation were high in the agenda
after Portugal asked for a EU bailout overnight, while
potentially higher euro zone interest rates will hike the cost
of debt for already highly indebted economies.
In Asia, China's central bank already lifted interest rates
this week for the fourth time since October, as it ramps up the
battle against inflation. []
The stronger crude future prices have pushed prices at the
pump globally, further exacerbating the inflationary pressure
governments face from the rising cost of food and raw materials.
"Current price levels should have a negative impact on
demand," said Tetsu Emori, a Tokyo-based commodities fund
manager at Astmax Investments.
The International Energy Agency said on Wednesday that the
current oil price is harming global economic growth and is a
mounting concern for consuming nations. []
Saudi Arabia and the United Arab Emirates have raised output
to compensate for supply loss from Libya but there has been no
coordinated supply policy response from OPEC to rein in high
prices. []
"The nature of this lack of response and general drift of
recent policy statements suggests that producers are a long way
from seeking actively to bridle in the upside for prices,
leaving the door to $130 Brent swinging open," analysts at
Barclays Capital led by Paul Horsnell said in a note.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Brent poll results: http://r.reuters.com/ken88r
ECB in graphics: http://r.reuters.com/kah88r
China fuel price rise: http://link.reuters.com/xaq88r
Middle East unrest: []
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U.S. JOBS DATA AWAITED, GASOLINE DEMAND FALLS
On the data front, U.S. weekly jobless claims are expected
to have dipped to 385,000 in the week ended April 2. The recent
decline in filings for unemployment benefits has coincided with
faster job growth. []
On Wednesday, weekly U.S. government data showed that
gasoline demand at the world's top oil consumer fell 1.2 percent
from year-ago levels as prices at the pump neared $3.7 a gallon.
Gasoline demand should pick up as the driving season begins
in the United States, but high prices would temper growth in
consumption. []
"(U.S.) demand will be challenged as higher retail prices
and little wage growth lead to a rising burden of gasoline
spending in U.S households' budget and disposable income,"
Harry Tchilinguirian, head of commodity markets strategy at BNP
Paribas, said in an overnight note.
Gasoline stocks fell less than forecast while a rise in
crude oil stocks were in line with expectations. []
(Additional reporting by Florence Tan in Singapore; editing by
Jason Neely)
