* Greek debt fallout concern rises after S&P downgrade
* U.S. oil inventories forecast to rise for 2nd week
* US consumer confidence rose to post-crisis high in April
(Recasts, updates prices, market activity; new byline,
changes dateline, previously LONDON)
By Joshua Schneyer
NEW YORK, April 27 (Reuters) - Oil fell more than 2 percent
on Tuesday toward $82 a barrel after investors concerned about
the Greek debt crisis and rising U.S. crude inventories pulled
cash out of energy markets in a flight from risk.
Standard & Poor's cut Greece's credit rating to junk status
minutes after downgrading Portugal. Concerns surrounding
debt-laden European economies have led to a bearish outlook for
fuel demand in a key consumption region. The euro extended
losses versus the dollar following the downgrades. <.DXY>
A firming dollar can weaken crude, priced in dollars, by
making it more costly for holders of foreign currencies.
"The Greek crisis, which is really a currency crisis, is
likely to get even worse over time," said Joseph Arsenio of
Arsenio Capital Management in Larkspur, California.
"As the euro comes under pressure, demand could be
affected."
U.S. crude for June delivery <CLc1> fell $1.88 to $82.32 a
barrel by noon EDT, while ICE June Brent crude <LCOc1> traded
down $1.19 at $85.64.
Brent, Europe's benchmark, traded at its biggest premium to
U.S. NYMEX crude since August, 2009, with an advantage of up to
$3.48 a barrel.
The key NYMEX benchmark crude fell as most analysts in a
Reuters poll expected data on Tuesday and Wednesday would show
that U.S. crude stocks rose for a second week last week, by
400,000 barrels a day, as refinery demand slumped. []
Crude inventories in the U.S. Midwest region, where NYMEX
crude is delivered, are already at their highest levels in at
least two decades, according to U.S. Energy Information
Administration data.
A perceived glut in the landlocked U.S. region -- including
at NYMEX crude's delivery point Cushing, Oklahoma -- has helped
to drag down NYMEX crude, even amid hopes that a recovering
U.S. economy may push fuel demand higher in coming months.
"Cushing is getting full and my sense is this has started
having greater significance for (NYMEX) WTI prices, weakening
them relative to other crude," said Arsenio.
"The situation could last, because more and more crude is
flowing into the region."
The American Petroleum Institute industry group reports
weekly U.S. stocks data later Tuesday, while data from the U.S.
Energy Information Administration is due Wednesday.
A rise in U.S. consumer confidence to an 18-month high in
April, according to a private industry group report, failed to
offset concerns over rising U.S. crude inventories and Greek
debt.
U.S. consumer confidence rose in April to the highest level
since the collapse of investment bank Lehman Brothers in
September 2008, driven by growing optimism about the labor
market, the report showed. []
Investors moved from riskier assets like stocks and
commodities into perceived safe havens like dollars and
Treasury bills.
The S&P stock index fell by 1.8 percent, while the dollar
firmed 0.8 percent against a basket of foreign currencies. []
<.DXY>
Germany demanded harsh new austerity measures from Greece
in return for freeing up financial aid for the debt-laden
economy. [][]
Oil markets are still factoring in economic recovery and
rising demand. Oil has risen by about 65 percent from a year
earlier, led higher by growth in demand from emerging markets
such as China. A year ago, U.S. crude futures were trading
around $50.
British oil major BP plc <BP.L>, the first international
oil major to report first quarter earnings, benefited from the
rise in oil prices and posted a 135 percent increase in profit
from a year earlier [].
(Additional reporting by Ikuko Kurahone and Barbara Lewis in
London and Alejandro Barbajosa in Singapore; Editing by David
Gregorio)
