CORRECTED-UPDATE 10-Oil falls as economic worries, stock market pressure

Wed Oct 10, 2012 11:23pm EDT

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(Corrects to say Brent touched $117.02 on Sept 17, not Sept. 1,
in 8th paragraph)
    * Turkey warns Syria about cross-border shelling
    * IMF warns on global financial stability
    * U.S. crude stocks rose, distillates fell last week-API
    * Coming up: EIA oil data, 11 a.m. EDT Thursday

    By Robert Gibbons
    NEW YORK, Oct 10 (Reuters) - Oil prices fell in volatile
trade on Wednesday as ongoing concerns about the economy and a
weak kick off to the earnings season weighed on stock markets. 
    Brent turned negative late as U.S. stocks fell after Alcoa
posted a quarterly net loss and Chevron warned profits would
fall sharply.
    U.S. crude turned lower and ended down more than 1 percent.
    Oil markets, which have been balancing concerns of lower
global fuel demand against the risk of supply disruptions in the
Middle East and loading delays of crude from the North Sea, also
 watched demand forecasts from the U.S. government and the
Organization of the Petroleum Exporting Countries.
    Reports released on Wednesday from OPEC and the U.S. Energy
Information Administration (EIA) lowered global oil demand
growth forecasts amid ongoing worries about economic growth.
 
    Crude drew early support from news of shelling along the
Turkey-Syria border, hostility between Iran and the West and an
impending Israeli election. Those events reinforced fears about
potential threats to oil supplies from the Middle East Gulf.
    "Although (U.S. crude) managed to further yesterday's Middle
East driven price spike early in the session, it subsequently
succumbed to a triple digit slide in the (Dow Jones industrials)
that sent off further caution flags regarding global economic
recovery," Jim Ritterbusch, president at Ritterbusch &
Associates, said in a note.
    
    PRICES FALL
    Brent November crude traded down 17 cents to settle
at $114.33 a barrel after trading as high as $115.59, the
highest since prices hit $117.02 on Sept. 17, according to
Reuters data.
    U.S. November crude settled $1.14 lower at $91.25 a
barrel. U.S. crude earlier tested resistance above the $93.33
peak from Oct. 1, after prices had stalled in consecutive
sessions at intraday highs of $93.18 and $93.20 on Sept. 24 and
25.
    U.S. gasoline and heating oil futures, which have been
supported by low inventory levels and refinery disruptions this
week, posted small gains despite the losses in crude.
    
    U.S. OIL INVENTORIES
    U.S. crude stocks rose 1.6 million barrels last week, the
industry group American Petroleum Institute said on Wednesday,
more than the consensus of analyst expectations. 
    Gasoline stocks rose 2.5 million barrels but distillate
inventories fell a whopping 6.2 million barrels, API said.
    Distillate stockpiles were expected to be down 500,000
barrels in the week to Oct. 5, a Reuters survey of analysts
showed. 
    Expectations were for an 800,000-barrel build in crude
inventories and no change in gasoline stocks.
    The government report from the EIA will follow at 11 a.m.
EDT (1500 GMT) on Thursday.
    Brent's premium to U.S. crude CL-LCO1=R seesawed, then
pushed higher to end at $23.08 a barrel based on settlements,
after reaching $23.39, the widest spread since Oct. 2011. 
    "Some temporary factors are keeping it wide, including a
lower-than-expected return of North Sea production and the
ongoing geopolitical premiums on the Brent side," said Vikas
Dwivedi, global oil and gas economist for Macquarie Group in
Houston, referring to the delays in Forties cargo loading in the
North Sea. 
    
     
    MIDDLE EAST, DEMAND WORRIES 
    Markets are closely monitoring the developments in Turkey
and Syria. Turkey's military chief of staff said on Wednesday
his troops would respond with greater force if bombardments from
Syria kept hitting Turkish territory. 
    "It's not that Syria and Turkey are significant oil
exporters but Iraqi crude from the northern part of Iraq
(Kirkuk) flows via pipeline through Turkey to Ceyhan," said
Dominick Chirichella, an energy analyst at New York's Energy
Management Institute.
    Gloomy economic expectations have tempered oil prices this
year against geopolitical turmoil, including the risk to
supplies from Iran due to sanctions from the West. 
    Oil prices came under early pressure from continuing worries
about economic growth after the International Monetary Fund said
risks to global financial stability had risen in the past six
months, leaving confidence "very fragile". 
    No. 2 oil consumer China's annual economic growth is
expected to have slowed for a seventh straight quarter in the
July-September period to its weakest level since the depths of
the global financial crisis, a Reuters poll showed.
 

 (Additional reporting by Matthew Robinson in New York, Alice
Baghdjian in London and Florance Tan in Singapore; Editing by
Dale Hudson, Sofina Mirza-Reid and Bob Burgdorfer)
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