* U.S. consumer confidence dips; awakens double dip fears
* Coming Up: API U.S. oil inventory report 2030 GMT
(Recasts throughout, previous dateline LONDON)
By Joshua Schneyer
NEW YORK, July 27 (Reuters) - Oil prices fell by more than
2 percent on Tuesday, reversing an earlier rally, after data
showed U.S. consumer confidence plunged to the lowest level in
five months, prompting investors to sell off riskier assets
including oil and equities.
U.S. consumer confidence fell in July to the lowest level
since February on worries about a stagnant job market in the
world's top economy. []
The data prompted U.S. benchmark oil prices <CLc1> to back
down sharply from a new 11-week high of $79.69 a barrel earlier
Tuesday, falling by $1.65 a barrel to $77.33 by 12:04 p.m. EDT
(1404 GMT).
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TECHNICALS-U.S. oil to rally toward $81/bbl
[]
Graphic on the technical outlook:
http://link.reuters.com/tyv79m
Graphic on the correlation of equities and commodities:
http://link.reuters.com/vyv79m
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U.S. stocks gave up short-lived gains, and the U.S. dollar
firmed against a basket of foreign currencies, an indication
investors were piling into safe havens, such as Treasury bonds.
[] []
Oil fell "on a technical reaction to not being able to hold
near $80 a barrel. We turned lower this morning on the bad
consumer confidence number, which also hit equities," said
Addison Armstrong of Tradition Energy in Stamford,
Connecticut.
ICE Brent <LC0c1> fell $1.63 to $75.87 a barrel by the same
time.
Rising oil production capacity in the Gulf of Mexico after
Tropical Storm Bonnie fizzled over the weekend without damaging
infrastructure also weighed on oil prices, analysts said.
[]
As of Monday, offshore producers in the U.S. portion of the
Gulf of Mexico were still idling around 27 percent of the
region's oil output following the uneventful passage of Bonnie,
following platform evacuations.
"The remainder of the outages are expected to come back
online shortly," J.P. Morgan said in a daily oil note.
MACROECONOMIC WOES
Yale University economist Robert Shiller, a well-known
prognosticator in real estate markets, told Reuters Insider on
Tuesday that he expects the U.S. economy to enter into a
double-dip recession as growth stalls. []
"For me a double-dip is another recession before we've
healed from this recession ... the probability of that kind of
double-dip is more than 50 percent," Shiller said.
As oil prices fall below $80, "a further drop cannot be
ruled out as people will point to a double-dip recession and a
Chinese (demand) slowdown," said Eugen Weinberg, head of
commodities research at Commerzbank in Frankfurt.
Oil prices have been testing a potential run over $80 a
barrel after trading in the $70 to $80 range since early June,
analysts said.
Some technical analysts, who study price charts for clues
to future direction, think oil prices could still break through
$80 a barrel following a breach of the key 200-day moving
average level last week.
Prices also fell on Tuesday as analysts expected data to
show that oil product stocks rose in the United States last
week, in spite of an expected dip in crude stocks.
U.S. crude oil inventories probably fell 1.8 million
barrels last week, a Reuters survey showed, but supplies of
distillate fuel, including diesel, may have climbed for the
ninth consecutive week and gasoline for the fifth, even as
summer demand peaks. []
(Additional reporting by Robert Gibbons in New York, Emma
Farge in London and Alejandro Barbajosa in Singapore; Editing
by Lisa Shumaker)
