Oil firms toward $71, US refinery glitches support

SINGAPORE, June 2 (Reuters) Oil rose to near on Friday, halting a two-day slide, as hiccups at two Texas refineries refocused attention to gasoline supplies in the United States, which rose less than expected last week.

OPEC, as expected, agreed on Thursday to keep pumping at near full capacity but prices held above , frustrating cartel members worried that sustained higher prices could backfire on it by slowing global economic growth.

U.S. crude for July delivery rose 31 cents to .65 a barrel by 0358 GMT, after falling 95 cents on Thursday. London Brent gained 23 cents to .62 a barrel.

U.S. gasoline inventories rose by 800,000 barrels last week, the fifth-straight week of gains but below the expected 1.1 million barrels, after a jump in demand that helped soothe some concerns that higher prices were limiting use.

Refinery hitches stoked supply concerns, with news of reduced gasoline production at two Texas plants.

Valero Energy Corp. said on Thursday it had cut gasoline output by 50,000 barrels per day (bpd) at a Corpus Christi plant following a fire in a storage tank, while Citgo Petroleum Corp. had to restart a gasoline-making unit at its 156,000-bpd refinery after a power outage.

''Any refinery problem will cause the market to rally, as we are going into big demand season. There is concern about gasoline,'' said Tony Nunan, assistant general manager of risk management at Mitsubishi Corp.

U.S. gasoline demand over the past four weeks averaged 9.32 million bpd, up 0.9 percent a year ago, the data showed.

Gasoline prices climbed up 1 percent a day ago, bucking the downtrend. July futures rose 0.36 percent to SINGAPORE, June 2 (Reuters) Oil rose to near $71 on Friday, halting a two-day slide, as hiccups at two Texas refineries refocused attention to gasoline supplies in the United States, which rose less than expected last week.

OPEC, as expected, agreed on Thursday to keep pumping at near full capacity but prices held above $70, frustrating cartel members worried that sustained higher prices could backfire on it by slowing global economic growth.

U.S. crude for July delivery rose 31 cents to $70.65 a barrel by 0358 GMT, after falling 95 cents on Thursday. London Brent gained 23 cents to $69.62 a barrel.

U.S. gasoline inventories rose by 800,000 barrels last week, the fifth-straight week of gains but below the expected 1.1 million barrels, after a jump in demand that helped soothe some concerns that higher prices were limiting use.

Refinery hitches stoked supply concerns, with news of reduced gasoline production at two Texas plants.

Valero Energy Corp. said on Thursday it had cut gasoline output by 50,000 barrels per day (bpd) at a Corpus Christi plant following a fire in a storage tank, while Citgo Petroleum Corp. had to restart a gasoline-making unit at its 156,000-bpd refinery after a power outage.

''Any refinery problem will cause the market to rally, as we are going into big demand season. There is concern about gasoline,'' said Tony Nunan, assistant general manager of risk management at Mitsubishi Corp.

U.S. gasoline demand over the past four weeks averaged 9.32 million bpd, up 0.9 percent a year ago, the data showed.

Gasoline prices climbed up 1 percent a day ago, bucking the downtrend. July futures rose 0.36 percent to $2.1348 a gallon on Friday.

Crude inventories rose by 1.6 million barrels last week, helped by strong imports, while distillates rose by 1.8 million barrels, the U.S. data showed. S] IRAN INCENTIVES, OPEC ROLLOVER Prices dipped earlier this week after the U.S. offered to start talks with Iran, but Tehran said it would not agree to Washington's condition that it halt uranium enrichment.

On Thursday world powers agreed a ''far-reaching'' package of inventives for Iran to stop its nuclear programme, including an offer to suspend action against the OPEC's number-two producer in the U.N. Security Council.

But traders and analysts remain sceptical about whether the new apporach would resolve the situation, supporting oil prices within sight of their record high of $75.35 a barrel from April.

OPEC's agreement to keep its spigots gushing did little to change traders' near-term view, as the cartel's leverage has been curbed by refinery bottlenecks, geopolitical fears and real supply disruptions in Iraq and Nigeria.

Saudi Oil Minister Ali al-Naimi said world oil markets were ''oversupplied and overpriced''.

Oil prices have also pulled back this week as investors punish other commodities such as gold, which hit a six-week low on the strengthening dollar.

REUTERS CS DS1145 .1348 a gallon on Friday.

Crude inventories rose by 1.6 million barrels last week, helped by strong imports, while distillates rose by 1.8 million barrels, the U.S. data showed. S] IRAN INCENTIVES, OPEC ROLLOVER Prices dipped earlier this week after the U.S. offered to start talks with Iran, but Tehran said it would not agree to Washington's condition that it halt uranium enrichment.

On Thursday world powers agreed a ''far-reaching'' package of inventives for Iran to stop its nuclear programme, including an offer to suspend action against the OPEC's number-two producer in the U.N. Security Council.

But traders and analysts remain sceptical about whether the new apporach would resolve the situation, supporting oil prices within sight of their record high of .35 a barrel from April.

OPEC's agreement to keep its spigots gushing did little to change traders' near-term view, as the cartel's leverage has been curbed by refinery bottlenecks, geopolitical fears and real supply disruptions in Iraq and Nigeria.

Saudi Oil Minister Ali al-Naimi said world oil markets were ''oversupplied and overpriced''.

Oil prices have also pulled back this week as investors punish other commodities such as gold, which hit a six-week low on the strengthening dollar.

REUTERS CS DS1145