UPDATE 7-Oil falls towards $78; storm concerns ease

                                
 * Tropical storm Alex expected to become hurricane
                                
 * U.S. consumer spending, incomes rise in May
                                
 * Shell, BP evacuate personnel from some U.S. platforms

                                
 (Updates prices)
                                
 By Alex Lawler
                                
 LONDON, June 28 (Reuters) - Oil fell towards $78 a barrel on
Monday, after earlier touching the highest in almost eight
weeks, as concern eased about the impact on supply from tropical
storm Alex.
                                
 Over the weekend, Alex became the first named storm of the
2010 Atlantic hurricane season, which forecasters expect to be
active. They said the storm could become a hurricane on Monday
or Tuesday.
                                
 U.S. crude for August <CLc1> was down 73 cents at $78.13 as
of 1256 GMT. It earlier rose as high as $79.38, the highest
intra-day price since May 6. August Brent crude <LCOc1> was down
83 cents at $77.29.
                                
 "It's profit-taking after the near two-month high and the
failure to reach the $80 level," said Carsten Fritsch, an
analyst at Commerzbank.
                                
 "The market is oversupplied. Given the high level of
stockpiles, any supply disruptions (caused by the storm) could
be met easily as long as they are short-lived."
                                
 OPEC Secretary General Abdullah al-Badri on Sunday put the
"inventory overhang" and oil held in storage on tankers at about
244 million barrels -- equal to almost three days of global oil
demand. [ID:nLDE65Q0I8]
                                
 "Many changes can still occur in the next 48 hours, and that
is why weather markets are volatile," said Olivier Jakob, an
analyst at Petromatrix.
                                
 "But we start the week with a storm picture that should be
if still a concern, a lesser one than at the end of last week".
                                
 
                                
 CONSUMER SPENDING
                                
 Oil failed to gain a lift in the tailwind of firmer European
equities and gains in some other commodities, including copper.
[MET/L]
                                
 U.S. consumer spending rose slightly more than expected in
May even as savings touched their highest level in eight months,
a government report showed on Monday. [ID:nN25167386]
                                
 While concern over the tropical storm was easing, it has
caused some disruption to supplies.
                                
 Mexico closed two of its main Gulf of Mexico oil exporting
terminals on Sunday as Alex moved over the Yucatan peninsula,
the government said. [ID:nN27240392]
                                
 Shell Oil <RDSa.L> shut subsea production at two platforms,
and BP <BP.L><BP.N> evacuated some personnel from three Gulf of
Mexico platforms, the companies said on Sunday. [ID:nN27622581]
                                
 The U.S. National Oceanic and Atmospheric Administration
forecasts 14 to 23 named storms for this year's season, with
eight to 14 developing into hurricanes. Three to seven of those
could be major Category 3 or above hurricanes. [ID:nN2798815]
 (Additional reporting by Alejandro Barbajosa; Editing by Alison
Birrane and Sue Thomas)