* U.S. crude, distillate stocks rise - EIA
* Weather seen milder this week
* Chinese monetary tightening a worry
(Updates prices at settlement, adds graph on heating oil
stocks)
By Edward McAllister
NEW YORK, Jan 13 (Reuters) - Oil prices fell below $80 a barrel
on Wednesday, pressured by a U.S. inventory report showing rises in
crude and distillate fuel stocks despite severe winter weather.
Crude stocks, expected to rise by 1.2 million barrels, shot up
by 3.7 million, the Energy Information Administration said.
Inventories of distillates, which include heating oil and diesel,
rose by 1.4 million barrels, instead of falling as forecast.
[]
Heating oil stockpiles, however, dropped by 1.1 million barrels
to 42 million barrels last week as a freeze lingered in the giant
U.S. Northeast market and other parts of the nation.
"It's a bearish report that points back to weak underlying
fundamentals in the domestic petroleum market," said Gene McGillian,
analyst at Tradition Energy in Stamford, Connecticut. "Distillate
stocks are up despite the cold weather last week, which means there
was no demand for anything except the heating oil."
U.S. crude for February delivery <CLc1> fell $1.14 cents to
settle at $79.65 a barrel. It earlier fell to $78.37, the lowest
since Dec. 29.
In London, Brent crude for February <LCOc1> delivery, which
expires on Thursday, fell 99 cents to settle at $78.31 a barrel.
The price of U.S. crude has fallen more than $4 from a 15-month
high of $83.95 reached on Monday and some analysts believe it could
have further to fall.
"It is becoming increasingly apparent that the upside breakout
above key $82 resistance seen last week never got going and seems to
have been no more than a short-lived burst higher," Edward Meir of
MF Global said in a report.
Oil inventories have bulged in the United States over the past
18 months as the economic crisis has cut energy demand. Very cold
weather over the past two weeks was expected to have helped to erode
stocks.
Warmer weather across the central and eastern United States is
expected to arrive in the next few days, DTN Meteorlogix said,
reducing heating demand. []
Investors have looked to wider economic data in recent months
for signs of economic recovery and a potential rebound in energy
demand. On Wednesday, U.S. stocks rose as investors bought financial
and technology shares ahead of earnings from bellwethers Intel Corp
and JPMorgan Chase. []
Oil was pressured on Tuesday by China's move to raise banks'
cash reserve requirements, the latest step towards tightening
monetary policy, which some traders see potentially dampening energy
demand.
China is the world's second-largest oil consumer after the
United States.
(Additional reporting by Robert Gibbons, Gene Ramos and Joshua
Schneyer in New York, David Sheppard and Alex Lawler in London,
Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)
