* Asian stocks fall on recovery doubts; China stocks dive
* Japan pulls out of recession, but outlook shaky
* Gulf of Mexico oil operations normal, companies eye storm
* U.S. consumer sentiment at lowest since March
(Releads, updates prices and Asian shares performance)
By Fayen Wong
PERTH, Aug 17 (Reuters) - Oil fell to a two-week low above
$66 a barrel on Monday, extending the previous session's
decline, as weak consumer sentiment in the U.S. raised worries
that oil's recent rally has run ahead of the global economic
recovery.
Oil on Friday fell by $3.01, or 4.27 percent -- the biggest
loss since July 29 -- after the Reuters/University of Michigan
Survey of Consumers showed consumer confidence in early August
dropped to the lowest level since March. []
U.S. crude oil futures <CLc1> fell 96 cents to $66.55 a
barrel by 0627 GMT, its lowest since July 31, while London
Brent crude <LCOc1> fell 66 cents to $70.78.
"Oil prices are still suffering from the hangover of last
week's poor U.S. consumer sentiment and high crude inventory
data. A fall in equities markets has further weighed on oil,"
said Ben Westmore, a commodities analyst at the National Bank
of Australia.
Asian stocks slid after a further deterioration in U.S.
consumer confidence cast doubts about the pace of the global
economic recovery and soured appetite for risky assets, with
the MSCI benchmark for Asia-Pacific shares outside Japan down 3
percent and the Shanghai Composite index <> dropping by
more than 5 percent to its lowest in nearly eight weeks.
Analysts say investors are torn between hopes China will
help to pull the world economy out of recession and worries
about a major correction in its red-hot stocks, stirring
volatility in a market. []
Oil' steep decline on Friday brought it to a weekly loss of
4.8 percent, snapping a four-week streak of gains that were
largely fuelled by optimism that the global economy had turned
a corner and recovery later this year would boost energy
demand.
While economy growth returned to Japan in the second
quarter, ending its longest recession since World War Two,
analysts warned of a rocky road ahead as the nascent recovery
in the world's third-largest energy consumer was based on
short-term stimulus efforts around the world. []
Key housing data and producer prices due to be released on
Aug. 18 will offer further clues on the health of the U.S.
economy, analysts said, although U.S. stocks could extend last
week's retreat after four weeks of gains as the earnings season
winds down. []
Although the hurricane season has arrived in the Atlantic,
analysts say swelling crude stockpiles that are at their
multi-year highs would limit the impact of a storm on oil
prices.
U.S Gulf of Mexico offshore oil patch output was unaffected
by Tropical Storm Claudette, which was quickly passing far to
the east of main production areas, oil companies said on
Sunday. []
The hurricane season has taken on a particularly ominous
feel in the Gulf Coast region because two of the past four
years have brought intense and destructive storms that
disrupted operations at offshore platforms and coastal
refineries, but many forecasts are for a mild hurricane season
this year.
Separately, Iran's OPEC governor Mohammad Ali Khatabi said
on Friday crude output increase is not on OPEC's agenda because
of high levels of oil storage by consumer countries.
[]
(Editing by Ben Tan)
