Oil dips under $71 after record high on Iran worry

SINGAPORE, Apr 19 (Reuters) U.S. oil eased on Wednesday but kept sight of its record high above a barrel as dealers feared Iran's intensifying row with the West over its nuclear aims may cut supplies from the world's fourth-largest exporter.

U.S. May crude oil futures fell 38 cents to .97 a barrel by 0757 GMT, after hitting a record-high of .60 the previous day, breaking through last August's .85 peak.

London's Brent crude shed 16 cents to .35 a barrel, having hit a fresh peak in each of the preceding six sessions on concerns that the ongoing loss of a quarter of Nigeria's supply will tighten European markets more than U.S.

A price rally ignited two years ago by strong demand in fast-growing Asian economies and extended last year by fears of limited global refining capacity has been given new legs by geopolitical tensions in OPEC producers Iran, Iraq and Nigeria.

Oil has trebled since the start of 2002 and may be set to test the inflation-adjusted peaks above a barrel reached in the early 1980s, just after the Iranian Revolution, setting off alarm bells in consuming nations fearful of an economic hit.

British finance minister Gordon Brown will this week urge the Group of Seven to seek better ways to ensure oil supplies and boost energy efficiency, extracts from a speech showed.

While a rally in gasoline prices has also helped lift oil by more than over the past four weeks, investors have focused on the worsening conflict over Iran's atomic programme, and more recently the prospect of U.S. military action.

''It's like the Cuban Missile Crisis, we are just waiting for someone to blink,'' said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.

On Tuesday, the United States failed to secure international support for targeted sanctions against Iran and President George W. Bush refused to rule out nuclear strikes if diplomacy failed to curb the Islamic Republic's atomic programme.

''All options are on the table. We want to solve this issue diplomatically and we're working hard to do so,'' Bush said.

The United States, which already enforces its own sweeping sanctions on Iran, wants the Security Council to be ready for strong diplomatic action, including a freeze on assets and visa curbs on Iranian officials.

Tehran has vowed to continue its pursuit of nuclear technology and, on Tuesday, warned that the Iranian army would powerfully defend any attack on the country.

The International Energy Agency (IEA), whose worldwide emergency oil stockpile release after last year's hurricanes helped bring prices back below , would be able to fill an Iranian outage with government reserves, Claude Mandil, the head of the energy watchdog, told France's RFI radio on Wednesday.

GASOLINE CONCERNS Gasoline prices have soared faster than crude since the start of April as inventories dwindle because refiners are adjusting to regulations to change supply from water-polluting MTBE-laden stock to product that contains ethanol, deemed a more environmentally friendly additive.

Fears of a supply squeeze at the start of summer -- when U.S. gasoline consumption peaks, accounting for more than a tenth of global oil demand -- have caused its premium to crude to double to a barrel, a level seen only twice before, when hurricanes Katrina and Rita hit the Gulf Coast last year.

''The way the cracks are pricing now, it looks like there is going to be a gasoline supply problem down the road,'' Coleman said.

Gasoline futures fell 0.71 percent to SINGAPORE, Apr 19 (Reuters) U.S. oil eased on Wednesday but kept sight of its record high above $71 a barrel as dealers feared Iran's intensifying row with the West over its nuclear aims may cut supplies from the world's fourth-largest exporter.

U.S. May crude oil futures fell 38 cents to $70.97 a barrel by 0757 GMT, after hitting a record-high of $71.60 the previous day, breaking through last August's $70.85 peak.

London's Brent crude shed 16 cents to $72.35 a barrel, having hit a fresh peak in each of the preceding six sessions on concerns that the ongoing loss of a quarter of Nigeria's supply will tighten European markets more than U.S.

A price rally ignited two years ago by strong demand in fast-growing Asian economies and extended last year by fears of limited global refining capacity has been given new legs by geopolitical tensions in OPEC producers Iran, Iraq and Nigeria.

Oil has trebled since the start of 2002 and may be set to test the inflation-adjusted peaks above $80 a barrel reached in the early 1980s, just after the Iranian Revolution, setting off alarm bells in consuming nations fearful of an economic hit.

British finance minister Gordon Brown will this week urge the Group of Seven to seek better ways to ensure oil supplies and boost energy efficiency, extracts from a speech showed.

While a rally in gasoline prices has also helped lift oil by more than $10 over the past four weeks, investors have focused on the worsening conflict over Iran's atomic programme, and more recently the prospect of U.S. military action.

''It's like the Cuban Missile Crisis, we are just waiting for someone to blink,'' said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.

On Tuesday, the United States failed to secure international support for targeted sanctions against Iran and President George W. Bush refused to rule out nuclear strikes if diplomacy failed to curb the Islamic Republic's atomic programme.

''All options are on the table. We want to solve this issue diplomatically and we're working hard to do so,'' Bush said.

The United States, which already enforces its own sweeping sanctions on Iran, wants the Security Council to be ready for strong diplomatic action, including a freeze on assets and visa curbs on Iranian officials.

Tehran has vowed to continue its pursuit of nuclear technology and, on Tuesday, warned that the Iranian army would powerfully defend any attack on the country.

The International Energy Agency (IEA), whose worldwide emergency oil stockpile release after last year's hurricanes helped bring prices back below $70, would be able to fill an Iranian outage with government reserves, Claude Mandil, the head of the energy watchdog, told France's RFI radio on Wednesday.

GASOLINE CONCERNS Gasoline prices have soared faster than crude since the start of April as inventories dwindle because refiners are adjusting to regulations to change supply from water-polluting MTBE-laden stock to product that contains ethanol, deemed a more environmentally friendly additive.

Fears of a supply squeeze at the start of summer -- when U.S. gasoline consumption peaks, accounting for more than a tenth of global oil demand -- have caused its premium to crude to double to $22 a barrel, a level seen only twice before, when hurricanes Katrina and Rita hit the Gulf Coast last year.

''The way the cracks are pricing now, it looks like there is going to be a gasoline supply problem down the road,'' Coleman said.

Gasoline futures fell 0.71 percent to $2.208 a gallon on Wednesday, having hit a post-hurricane peak on Tuesday.

Analysts are expecting U.S. weekly government data due later on Wednesday to show another draw in gasoline inventories for the week ended April 14 of about 2.5 million barrels. S] Tight motor fuel stocks may be worsened by the two-month-long loss of more than 500,000 barrels per day (bpd) of OPEC producer Nigeria's high-quality crude output, coveted by refiners in the summer months for its rich gasoline content.

REUTERS CS HS1353 .208 a gallon on Wednesday, having hit a post-hurricane peak on Tuesday.

Analysts are expecting U.S. weekly government data due later on Wednesday to show another draw in gasoline inventories for the week ended April 14 of about 2.5 million barrels. S] Tight motor fuel stocks may be worsened by the two-month-long loss of more than 500,000 barrels per day (bpd) of OPEC producer Nigeria's high-quality crude output, coveted by refiners in the summer months for its rich gasoline content.

REUTERS CS HS1353