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Oil dips below $61 as U.S. stockbuild looms

Written by: Staff
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SINGAPORE, Feb 23 (Reuters) - Oil fell below a barrel on Thursday, deepening losses as traders positioned for a further increase in bulging U.S. crude and gasoline stocks.

U.S. crude for April delivery shed 27 cents to .74 a barrel by 0520 GMT. London Brent was off 30 cents to .14.

Prices fell 2.8 percent on Wednesday as traders refocused on healthy oil inventories in the United States, setting aside for the moment an upsurge of militant violence in Nigeria that has shut in a fifth of the OPEC member's output.

''Fundamentals have taken back the spotlight,'' said John Brady, a broker at ABN AMRO in New York.

U.S. crude oil stocks are expected to have risen by 1.1 million barrels last week, widening their surplus versus last year, while gasoline stocks were seen climbing by the same volume to a new six-year high, analysts said. S] Distillate stocks, which include heating oil, were expected to have fallen by 1.0 million barrels, which would still leave them at historically robust levels after an unusually warm winter. U.S.

Department of Energy data are due at 1430 GMT.

The healthy stockpile buffer has helped offset some of the geopolitical concerns that drove prices as high as .20 a barrel in late January, including Iran's nuclear row, Nigerian militant attacks and disrupted Russian natural gas supplies.

Nigerian violence, which first hit exports in January, flared again at the weekend as militants demanding more control over the Niger Delta's oil wealth struck pipelines and export terminals, shutting in 455,000 barrels of daily production.

Dealers added smaller South American exporter Ecuador to their list of supply concerns this week after protesters shut down a 160,000 barrel-per-day (bpd) private pipeline.

The government late on Wednesday said it had reached an agreement with protesters to halt the disruptive protests.

Oil prices have been volatile so far this year, surging in early January on a wave of investor enthusiasm for commodities and geopolitical factors, before quickly unwinding all those gains in February as warm weather helped build up stockpiles.

''The volatility has been treacherous,'' said Brady. ''A lot of people are sitting back and waiting for it to settle a bit.'' Dealers were also sidelined ahead of two key meetings in Vienna early next month.

The board of the International Atomic Energy Agency (IAEA) meets on March 6 to debate the next step in resolving Iran's row with the West over its nuclear programme, which could result in sanctions that traders fear may prompt Tehran to cut exports.

OPEC meets two days later to decide whether to keep pumping flat-out in an effort to cool prices or to curb production to prevent a glut of crude building up during the second quarter, when demand is at its weakest.

REUTERS CS SSC1110

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