* Tropical Storm Alex path seen less threat to oil output
* U.S. consumer spending, incomes rise in May-supports oil
* Coming up: API oil inventory data on Tuesday
(Recasts, updates prices, market activity, moves dateline
from previous LONDON)
By Robert Gibbons
NEW YORK, June 28 (Reuters) - Oil fell on Monday as concern
eased about the threat to production in the Gulf of Mexico from
Tropical Storm Alex, offsetting any support from a report
showing U.S. consumer spending rose more than expected in May.
U.S. crude prices fell back after reaching an almost
eight-week high above $79 earlier in the session, having
settled at a seven-week high on Friday when prices jumped more
than 3 percent on concerns tropical weather would disrupt
supply.
Over the weekend, Alex became the first named storm of the
2010 Atlantic hurricane season. Forecasters, expecting an
active season, said Alex could become a hurricane on Tuesday.
At 12:11 p.m. EDT (1611 GMT), U.S. crude for August <CLc1>
was down 88 cents at $77.98 a barrel. It earlier rose to
$79.38, the highest intraday price since May 6.
August Brent crude <LCOc1> was down 73 cents at $77.39.
"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."
STORM DISRUPTS SOME SUPPLY
While concern over Alex's weather threat 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. []
Shell Oil <RDSa.L> shut an undisclosed amount of output
from two platforms, and BP <BP.L><BP.N> evacuated some
personnel from three Gulf of Mexico platforms. []
Other companies were evacuating nonessential offshore
workers as a precaution on Monday.
The U.S. National Hurricane Center said on Monday it
expected Alex, to hit near the Texas-Mexico border early
Thursday. []
Most weather models project a north of the border hit, but
the models were still shifting. Earlier Monday, most models
forecast the storm would hit south of the border.
Refineries in Corpus Christi, Texas, would be closest to
the projected storm path as the threat to the giant
petrochemical and refining complex in the Houston area lessened
on Monday.
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. []
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. []
"Many changes can still occur in the next 48 hours," 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
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. []
Also providing some pressure to oil, the euro fell broadly
as potential funding tensions in Europe this week weighed on
the single currency.
After seesawing early, U.S. stocks advanced, helped by the
consumer spending report. However, markets remained edgy on
caution about global economic recovery.
(Additional reporting by Alex Lawler in London, Alejandro
Barbajosa in Singapore; Editing by Marguerita Choy)
