* U.S. gasoline futures hit highest since early May
* Crude oil, distillate stocks seen down last week
* Coming Up: API oil inventory data; 2130 GMT
(Updates throughout, previous SINGAPORE)
By Barbara Lewis and Claire Milhench
LONDON, Dec 21 (Reuters) - Oil prices turned negative on
Tuesday after two sessions of gains as nervousness about the
euro-zone economy discouraged investment in risky assets and the
support provided by cold weather melted away.
U.S. crude was 4 cents lower at $89.33 at 1145 GMT, down
from a high hit earlier this month of $90.76 -- the strongest
for more than two years.
Brent crude <LCOc1> traded 19 cents lower at $92.55 a
barrel.
"All the signs are that maybe the market has gone as far as
it's going to go particularly if we're going to see the cold
weather in the Northern hemisphere ease a little," said
Christopher Bellew of Bache Commodities in London.
He expected to see any speculative buying he said had
supported the markets to fizzle out as asset managers squared
their books for the year end.
Appetite for riskier, dollar-denominated assets such as oil
could also be subdued by the prospects for a weakening euro
after Portugal was put on notice that its credit rating could be
cut and Spain had to pay more to issue new debt. []
Oil becomes more expensive for non-dollar buyers when the
dollar is relatively strong.
INCREASE HEATING FUEL USE
Freezing weather has driven up heating fuel consumption in
northern Europe and the United States, where heating demand was
expected to be 4.6 percent above normal this week, according to
the U.S. National Weather Service. []
Increased heating demand could be offset to an extent by
reduced transport use as many are forced to stay at home,
analysts said.
However, expectation driving demand over Christmas and new
year holidays would boost U.S. consumption helped to increase
U.S. gasoline futures <RBc1> to a session peak of $2.3890 a
gallon, their highest since early May.
Weekly oil inventory reports for the United States were
expected to show gasoline stockpiles had risen, although crude
oil and distillate stocks, which include heating oil, fell last
week, according to a Reuters survey of analysts on Monday.
[]
U.S. oil inventory data from the American Petroleum
Institute is scheduled to be released later on Tuesday, with the
government's report following on Wednesday.
Harsh winter weather in China, the world's second biggest
oil user after the United States, has also stoked demand.
Kerosene imports for November hit an all-time high of
861,388 tonnes, up nearly 61 percent a year ago, official
customs data showed on Tuesday. [].
Future transport demand in China could be eroded by reports
the price of gasoline and diesel could be raised on Wednesday by
about 4 percent, lifting domestic fuel prices to an all-time
high [].
The festive and end-of-year period was expected to subdue
trading volumes this week when the market would face strong
resistance at $90 a barrel and support at $88, technical
analysts said.
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For a graphic, see:
http://graphics.thomsonreuters.com/F/12/CN_TRD1210.html
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(Additional reporting by Seng Li Peng and Randy Fabi in
Singapore; editing by William Hardy)
