Oil dips in Singapore

Oil prices eased on Wednesday, as gasoline inventories in the United States were expected to rise for the sixth week to soothe fuel supply concerns, though forecasts for strong demand limited losses. London Brent crude, currently seen as more representative of the global market, was down 18 cents at $68.61 a barrel, extending a 77 cent drop on Tuesday.
Brunet's July contract expires on Thursday. US crude fell 19 cents to $65.16 after a 62-cent fall. The losses came as Asian stocks and other commodities markets were pressured down on Wednesday by worries that higher interest rates will mean weaker growth in demand for commodities.
US gasoline stocks were forecast to have risen by 1.7 million barrels last week as refinery usage increased, a Reuters poll of analysts said, though analysts said demand was still looking strong in the world's top consumer. "We are making a slight increase in our implied gasoline demand assumption. on expectations that demand will trend higher as we approach the peak of the summer driving season," said J.P. Morgan.
The forecast for rising gasoline stocks outweighed a bullish report on Tuesday from the International Energy Agency (IEA), adviser to 26 industrialised nations, which raised its global energy demand growth estimates for this year. "The message is that in countries where rapid development is leading to big increases in living standards and GDP growth, the price elasticity of oil demand is very low," said Barclays Capital.
The IEA lifted its 2007-demand growth forecast to 1.7 million barrels per day (bpd), up 200,000 bpd from the previous forecast, and urged the Organisation of the Petroleum Exporting Countries to raise production to help lower prices.
Opec has agreed since late last year to cut a total 1.7 million-bpd of output, roughly 6 percent of supplies, helping lift oil from around $50 a barrel in January. US crude stocks were seen falling 500,000 barrels last week in the government data due later on Wednesday. Top oil exporter Saudi Arabia has told customers it will continue supplies at reduced levels in July, after some analysts predicted Opec would begin easing output restrictions.
Traders are still watching potential supply disruptions, such as Iran's nuclear dispute with the West, militant attacks on Nigeria's oil infrastructure and the Gulf of Mexico hurricane season.
"There is the potential for further tightness in oil markets over the balance of 2007," said David Moore, commodities strategist at the Commonwealth Bank of Australia. The US Energy Information Administration (EIA) said on Tuesday it expected hurricanes to cut about 13 million barrels of crude production and 86 billion cubic feet of natural gas production from the Gulf of Mexico this year.
But the EIA added there was only a 1.3 percent probability that hurricanes will wreak as much damage on Gulf of Mexico oil and gas production as they did in 2005, when some 100 million barrels of crude production were lost.