* U.S. July crude contract expired on Tuesday
* U.S. crude oil inventories probably fell last week-poll
* Coming up: EIA inventory data, 10:30 a.m. EDT Wednesday
(Recasts, updates market activity and with settlement prices)
By Robert Gibbons
NEW YORK, June 22 (Reuters) - Crude oil futures fell on
Tuesday on lowered expectations about a demand boost in China
and a combination of mixed economic data as the U.S.
front-month July contract expired.
Expiring front-month U.S. July crude <CLc1> fell 61 cents,
or 0.78 percent, to settle at $77.21 a barrel, bouncing from an
early $76.53 low and having traded as high as $78.10.
U.S. crude for August <CLc2>, which takes over as the front
month, fell 76 cents, or 0.97 percent, to settle at $77.85 a
barrel, having seesawed in tandem with the July contract.
In London, ICE Brent for August <LCOc1> fell 78 cents to
settle at $78.04 a barrel.
"The knee-jerk positive reaction and euphoria related to
the yuan news were definitely overdone. So, it's logical to see
the markets giving up the gains from yesterday," said Eugen
Weinberg, head of commodity research at Commerzbank.
China's yuan <CNY=CFXS> rose on Tuesday after the central
bank set the currency's daily mid-point <CNY=SAEC> at its
highest against the dollar since a revaluation in July 2005.
Oil seesawed with Wall Street, which was hemmed in
initially by data showing sales of existing homes fell
unexpectedly in May. Weak energy shares weighed late on
regulatory uncertainty. []
Global stocks fell as a downgrade of BNP Paribas <BNPP.PA>
by Fitch ratings agency hit banking stocks that led to an end
of a nine-day rally. []
"Crude faded at expiration. The market digested the China
move and wasn't helped by a combination of worries about banks
and Europe and the MasterCard (gasoline) demand figures, and
uncertainty is not a positive for the market," said Gene
McGillian, analyst, Tradition Energy in Stamford, Connecticut.
MasterCard's SpendingPulse report said U.S. weekly retail
gasoline demand rose 0.4 percent last week versus the previous
week. But demand dropped 2.7 percent against the 2009 period
and over the previous four weeks, demand was down 0.4 percent
versus the same period in 2009. []
Adding pressure to oil futures on Tuesday was news that a
U.S. judge blocked the Obama administration's six-month ban on
deepwater drilling imposed in the wake of BP Plc's <BP.L> Gulf
of Mexico oil spill. []
The White House said it would appeal the judge's ruling,
issued in New Orleans after oil companies involved in offshore
drilling operations had challenged the moratorium.
Both oil and natural gas futures prices had been bolstered
by the prospect of lost supply going forward.
U.S. INVENTORIES
A Reuters analyst poll on Tuesday ahead of weekly inventory
reports forecast U.S. crude stocks to have fallen 800,000
barrels last week. Gasoline stocks were expected to be down
100,000 barrels and distillate inventories up 1.3 million
barrels. []
The industry group American Petroleum Institute will issue
its weekly inventory report at 4:30 p.m. EDT (2030 GMT) on
Tuesday. The U.S. Energy Information Administration's report
was due on Wednesday at 10:30 a.m. EDT (1430 GMT).
Front-month U.S. crude posted a $78.92 a barrel intraday
high on Monday, but pulled back as charts indicated technical
resistance. Prices have recovered about 20 percent from a
trough below $65 on May 20, they are still more than $9 lower
than the 19-month high of $87.15 hit on May 3. (Graphic
http://r.reuters.com/dyc53m)
U.S. crude's failure to breach strong resistance at $78.40
-- the 61.8 percent Fibonacci retracement on the move from
$87.15 to $64.24 -- brings a new target of $76.50 into play,
according to a Reuters market analyst. []
Monday's crude rally came after China's central bank
allowed the yuan to rise by nearly 0.5 percent against the
dollar in the spot market, the daily limit, following a pledge
at the weekend to make the currency more flexible.
That led to a commodities rally on Monday amid prospects
for increased buying power from China.
On Wednesday, the U.S. Federal Reserve's Federal Open
Market Committee will conclude its two-day meeting, with
financial markets expecting that that low interest rates will
remain intact.
(Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Alejandro Barbados in Singapore; Editing
by Marguerita Choy)
