Oil steadies at $70 after gasoline stock surprise

SINGAPORE, June 14 (Reuters) Oil price steadied at around $70 a barrel on Thursday, with traders catching their breath after a $1 spike on unexpectedly flat gasoline stocks and a deepening deficit in heating fuel supplies.

London Brent crude for July rose 7 cents to $70.01 a barrel by 0255 GMT, adding marginally to Wednesday's $1.15 rally after data showed gasoline inventories stuck at unseasonally low levels with the summer driving season getting into full swing.

U.S. crude slipped 9 cents to $66.17 a barrel after a milder gain of 91 cents the day before.

U.S. heating oil led the oil complex's gains overnight as stocks fell sharply to stand in a very deep deficit compared with a year ago, while gasoline lagged the rally with a 1 per cent rise.

Gasoline was steady at $2.1555 a gallon on Thursday.

U.S. government data on Wednesday showed gasoline stocks were unchanged at 201.5 million barrels, contrary to forecasts for a sixth consecutive build, as refinery utilisation slid by 0.4 percentage points and imports dropped sharply.

Crude stocks rose just 100,000 barrels in the week to June 8 and distillate stocks rose 300,000 barrels, but heating oil inventories fell by 2.8 million barrels to 31.5 million barrels, down about a third from a year ago.

''Seasonal oil product inventory building was already slow in May. It ground to a virtual halt the first week of June,'' said UBS analyst Jan Stuart in a report, noting that total fuel stocks against oil demand stood 4 percent below the five-year average.

The heating oil premium over crude surged by more than $1 as traders grew concerned that refiners efforts to maximise gasoline production could keep heating fuel stocks thin through the summer, leading to a scramble for pre-winter supplies.

Oil traders were also on guard for a possible further escalation in tensions over Iran's atomic programme, with European powers telling Tehran at the International Atomic Energy Agency board meeting on Wednesday that it faced a possible third round of broader sanctions.

Separately, Iranian President Mahmoud Ahmadinejad reiterated his defiance to the threat of further action, saying Iran ''does not give the slightest value to your resolution.'' REUTERS SG RK0910