* 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, adds quotes)
By Zaida Espana
LONDON, April 7 (Reuters) - Brent crude futures dipped on
Thursday after five days of gains, slipping under $122 a barrel
on concerns that strong prices could crimp demand and as some
central banks start moving to control inflation.
Brent crude <LCOc1> shed 35 cents to $121.95 a barrel by
1009 GMT. It hit a 2-1/2-year high above $123 on Wednesday,
driven by violence in the Middle East.
U.S. crude futures <CLc1> were flat at $108.83 a barrel
after touching $109.15 on Wednesday, their highest level since
September 2008.
The market focus is on a European Central Bank meeting later
in the day. Analysts polled by Reuters expect to see a 25 basis
point interest rates increase from a 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.
"Should the ECB surprise the market by not hiking rates, a
dollar rebound would see a pullback across most commodities,"
analyst Andrey Kryuchenkov from VTB Capital said.
Oil prices slipped even after rebels said Muammar Gadaffi
damaged a pipeline connecting oilfields to the port town of
Marsa el Hariga. Analysts noted the supply disruptions may have
already been priced in. []
"We can't possibly justify a further sustained boost to
prices unless unrest erupts in an oil-producing country other
than Libya with serious threats to crude supplies," Kryuchenkov
added.
Euro zone debt worries and inflation were high on the agenda
after Portugal overnight asked for a EU bailout and on concerns
that a rise in euro zone interest rates would push up the cost
of debt for already highly indebted economies.
In Asia, China's central bank lifted interest rates this
week for the fourth time since October as it ramps up the battle
against inflation. []
The strong crude future prices have pushed up 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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US JOBS DATA, GASOLINE DEMAND
On the data front, U.S. weekly jobless claims, due later in
the day, 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 $3.70 a
gallon.
Gasoline demand should pick up as the U.S. driving season
begins, 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 was in line with expectations. []
(Additional reporting by Florence Tan in Singapore; editing by
Jason Neely and Jane Baird)
