(Adds analyst comment, U.S. data, updates prices)
By Jane Merriman
LONDON, April 23 (Reuters) - Oil eased on Wednesday from a
record high of nearly $120 a barrel in the previous session,
after crude oil stocks rose more than expected last week in the
world's top energy consumer the United States.
U.S. crude <CLc1> for June was down 47 cents at $117.60 a
barrel at 1506 GMT. The May contract expired on Tuesday at
$119.37, after briefly hitting an all-time peak of $119.90.
London Brent crude <LCOc1> was down 25 cents at $115.70,
after touching a record high of $116.75 the previous session.
Latest weekly fuel inventory data from the U.S. Energy
Information Administration showed a bigger-than-expected rise in
crude oil inventories and a big drop in gasoline stocks. []
"There's plenty of crude out there," said Phil Flynn,
analyst at Alaron Trading. "This is one of those reports where
you are going have a sort of push and pull effect," he said.
"The market has to determine if it is more concerned about
products right now or the availability of crude oil."
Crude stocks rose 2.4 million barrels last week, when
analysts had forecast a 1.2 million barrel increase.
Gasoline inventories fell 3.2 million barrels, more than the
2.3 million barrel draw analysts had forecast.
Oil has surged above $100 this year in response to booming
demand from emerging markets such as China alongside
underinvestment in new oil supplies that have contributed to a
five-fold increase in prices since 2002.
Hedge funds and other investors have poured money into oil,
gold and other commodities because of turmoil in equity and bond
markets related to the credit crisis.
"A lot of the movement up to $120 can be explained with
financial demand. We don't feel $120 is justifiable in terms of
underlying fundamentals," said Michael Waldron oil analyst at
Lehman Brothers.
DEMAND STILL HIGH
The threat of a U.S. recession has not put the brakes on
oil's advance and high prices have yet to have a major impact on
demand.
"We are seeing no evidence of demand destruction even as
prices keep rising," said Jim Ritterbusch, president of
Ritterbusch and Associates in Galena, Illinois.
"OPEC is still not willing to pump more oil onto the market,
and to add to the situation, there is no significant production
increase beyond OPEC," he added.
President George W. Bush on Tuesday said he was concerned
about record high crude oil and gasoline prices. []
But a meeting of major energy producers and consumers in
Rome this week highlighted the fact that the world might have to
live with high oil prices to ensure supplies for the future.
[]
Long-dated oil prices are above $100 a barrel out to 2016,
illustrating the long-term supply constraints.
Disruptions in Nigeria have intensified the market's bullish
tone.
Pipeline attacks in OPEC member Nigeria last week shut
169,000 barrels per day (bpd) of Bonny Light production, forcing
Royal Dutch Shell <RDSa.L> to declare force majeure on exports.
Britain's Grangemouth oil refinery is proceeding with a
gradual shutdown ahead of a planned strike at the weekend.
Management and union members are in talks to try to avert the
strike which could disrupt fuel supplies in the UK. []
(Additional reporting by Luke Pachymuthu in Singapore; editing
by James Jukwey/Santosh Menon)
