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Oil slips for 2nd day as U.S. crude inventories climb







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10/03/2010 03:35 London time | story: 572633

* U.S. crude stockpiles jump 6.5 mln bbl -API

* Coming up: China Feb trade data; EIA report, 1530 GMT

By Alejandro Barbajosa

SINGAPORE, March 10 (Reuters) - Oil fell for a second day on Wednesday after an industry report showed U.S. crude stockpiles jumped more than expected last week, dampening hopes of a strong recovery of demand in the world's top user.

Markets awaited further signals on consumption from China, the world's second-largest oil user, whose February trade data for February is to be published on Wednesday. [ID:nTOE62901H]

World stocks fell slightly on Tuesday, but hovered just shy of six-week highs, and a rising yen signaled some investors are growing more risk averse.

"The market has been strong on the belief that the economy is slowly getting better, but it's probably gone too far," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.

U.S. crude for April delivery <CLc1> fell 22 cents to $81.27 by 0328 GMT, after touching $82.41 on Monday, the highest level since prices jumped to a 15-month high of $83.95 on Jan. 11. London ICE Brent for April fell 14 cents to $79.77.

U.S. crude inventories rose by 6.5 million barrels in the week to March 5, against analysts' forecasts for an increase of 1.9 million barrels, the industry-funded American Petroleum Institute (API) said on Tuesday. [ID:nN09101093]



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Government inventory data will follow on Wednesday at 1530 GMT, when the Energy Information Administration publishes its weekly report.

The API also said U.S. gasoline stockpiles fell 3.2 million barrels, after a Reuters poll of analysts forecast a gain of 200,000 barrels.

"The crude market seems to have been driven by gasoline on the way up," Mitsubishi's Nunan said. "It's a seasonal thing; as we go into spring, there is usually a gasoline-driven rally."

But gasoline prices fell on Tuesday, when RBOB gasoline futures led the oil complex lower.

"Maybe gasoline is getting overdone because demand in the U.S. is not great and inventories are still high," Nunan said.

Inventories of distillates -- which includes diesel and heating oil -- showed a 2.8 million barrel draw, compared with forecasts for a 900,000 barrel draw.

China's exports were expected to have grown strongly in year-on-year terms thanks to the dual effect of a low comparison base and stronger demand as the global economy recovers. (Editing by Clarence Fernandez)









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