UPDATE 2-Oil heads for 1st quarterly drop since 2008

                                
   * Quarter of U.S. Gulf output shut due to Alex -govt
                                
 * Coming Up: EIA U.S. inventory report; 1430 GMT
                                
 * For a technical view, click: [ID:nSGE65T00F]
  (Recasts lead, updates prices, adds analyst's quote)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, June 30 (Reuters) - Oil edged higher on
Wednesday, but was still headed for its first quarterly drop
since 2008 as stresses across financial markets in the past
weeks sullied a more positive demand outlook seen earlier in
the year.
                                
 Crude oil prices have declined almost 10 percent from the
end of March, the first quarterly drop since the
October-December period in 2008.
                                
 In early May, U.S. crude hit a 19-month high above $87, but
concern about the pace of growth in top consumers the United
States and China and worries about the debt crisis in Europe
have sent risk aversion and dollar higher, sapping strength
across raw material markets.
                                
 "Looking at the oil prices around mid-April, it fell in the
same way as it did in the midst of the financial crisis, to
somewhere above $60 a barrel," said Ben Westmore, commodities
economist at National Australia Bank.
                                
 "But it turned around by June, helped by both the deepwater
drilling moratorium on offshore drilling and the more severe
hurricane outlook. Any further price increase is likely to be
gradual... we expect the fourth quarter average in the low
$80s."
                                
 For a graphic of daily percentage changes of crude and the
dollar over the past 10 quarters, click:
 http://graphics.thomsonreuters.com/gfx/CT_20103006120122.jpg 
 U.S. crude for August <CLc1> rose 33 cents to $76.27 at 0820
GMT after tumbling as much as 61 cents earlier in the day. ICE
Brent crude <LCOc1> rose 4 cents to $75.48.
                                
 Crude pared losses after the United States late on Tuesday
said Hurricane Alex had forced the shutdown of a quarter of
U.S. oil production in the Gulf of Mexico and after an industry
report showed the nation's inventories fell more than expected
last week. [ID:nWEN6503] [API/S]
                                
 But the macro worries remain.
                                
 "I am very bearish on Europe," said Clarence Chu, an energy
trader at Hudson Capital Energy in Singapore.
                                
 "The market just wants to get higher and then there is bad
news and it comes down again. The premium for Alex has
evaporated, so I wouldn't be surprised if prices come back
down. It could get really close to the $75 support level."
                                
 Banks must repay 442 billion euros ($545.5 billion) to the
European Central Bank on Thursday, leaving a potential
liquidity shortfall in the financial system of over 100 billion
euros. [ID:nLDE65R0LE]
                                
 Asian stocks slid and the euro struggled near a two-week
low on concerns over banks' funding conditions in Europe and
the pace of the global recovery. [MKTS/GLOB]
                                
 The S&P 500 <.SPX> tumbled to its lowest level in eight
months, with 499 of the index's 500 constituents down on
Tuesday in a sell-off triggered by a wave of rising alarm over
the global economic outlook.
                                
 Risk aversion intensified, with Wall Street's fear gauge
the VIX index <.VIX> jumping 17 percent and a report showing a
slump in U.S. consumer confidence on Tuesday.[ID:nN29138077]
                                
 ALEX AND INVENTORIES
                                
 Tropical Storm Alex was upgraded to a hurricane in the Gulf
of Mexico late on Tuesday but was moving north of Mexican oil
rigs and far southwest of U.S. fields, easing concerns about a
supply disruption. [ID:nN29120831]
                                
 Precautionary evacuations and closures interrupted 395,878
barrels per day (bpd), or 24.7 percent of U.S. oil output in
the Gulf of Mexico, the U.S. Bureau of Ocean Energy Management,
Regulation and Enforcement said late on Tuesday. [ID:nWEN6503]
                                
 "They will only shut down for a few days, but obviously
there will be an impact on next week's inventory figures," Chu
said.
                                
 "It's the hurricane season, but I don't think there is any
potential threat just yet. Damage to oil rigs could change
fundamentals dramatically."
                                
 U.S. crude inventories fell 3.4 million barrels in the week
to June 25, industry group the American Petroleum Institute
said on Tuesday, outstripping analyst expectations of a
900,000-barrel draw in the latest Reuters poll. [ID:nN29230427]
                                
 Gasoline stocks fell 908,000 barrels, versus analysts'
expectations of a 500,000-barrel draw, but distillates,
including heating oil and diesel, rose 4 million barrels, above
forecasts for a 800,000-barrel gain.
                                
 The U.S. Energy Information Administration will publish
more closely-watched government statistics on inventories and
consumption on Wednesday at 1430 GMT.
 (Editing by Himani Sarkar)