* Pace of U.S. economic recovery still shaky
* Build up of supply continues to weigh on U.S. crude
* Concerns about a prolonged Exxon pipeline outage weigh
* Coming Up: U.S. EIA Oil inventory data 1430 GMT
By Luke Pachymuthu
SINGAPORE, April 3 Brent crude slipped toward
$110 a barrel on Wednesday, dropping for a second straight day
as swelling oil inventories in the United States and recent weak
data fuelled worries about demand from the world's top consumer.
U.S. oil prices came under further pressure from concerns
about a prolonged pipeline outage in the Midwest leading to a
buildup in stockpiles near the delivery point of the benchmark
contract in Cushing, Oklahoma.
Crude oil stocks in the United States rose 4.7 million
barrels for the week ended March 29, according to data from
industry group the American Petroleum Institute, much higher
than the 2.2 million forecasted by a Reuters poll.
Investors suggest the build in inventory reflects a weak
economy which is still struggling to recover and limiting oil
"The U.S. economy took such a body blow three, four years
ago with the financial crisis, it's like a patient that's been
hit by a car, it's going to take a long while for it to
recover," said Jim Ritterbusch, president at Ritterbusch and
Associates in Galena, Illinois.
"And if the patient is in such shape, it is going to take
time for us to start seeing demand actually growing to levels
before the financial crisis."
Brent dropped 52 cents at $110.17 a barrel by 0217
GMT, after hitting a low of $110.16 earlier in the session. U.S
crude slid 63 cents to $96.56 a barrel.
And a slew of recent weak economic data shows oil prices may
face further headwinds.
Britain's manufacturing activity shrank for a second
straight month, a survey showed on Tuesday, while U.S. factory
activity grew at its slowest rate in three months in March,
indicating a muddy outlook for oil demand.
Europe's demand for oil has also been hit by seasonal
refinery maintenance, traders said.
"We could possibly see the backwardation on the Brent curve
between May and June narrow further because there is a lot of
crude now swashing around in Europe, with no refinery demand,"
The Brent-U.S. crude spread CL-LCO1=R widened slightly to
$13.70 a barrel from its settlement in the previous session.
Brent's premium to U.S. crude rose to a more than one-week
high of $14.66 on Tuesday amid uncertainty surrounding the
impact of the ruptured Exxon Mobil Pegasus pipeline in
the U.S. Midwest.
Investors said the pipeline shutdown could potentially
contribute about 300,000 to 400,000 barrels a week to crude
inventories at Cushing.
"But the glut again in Cushing is reflective also of demand
and the pipeline alone isn't going to drain off supply,"
Exxon said it was developing a plan to excavate, remove and
replace the ruptured portion of the pipeline, while a U.S.
pipeline agency said Exxon would need to test and submit a
remedial work plan before it could resume operations.
Markets are now waiting for key U.S. jobs data later this
week for clues on the health of the world's largest economy and
indications on its appetite for oil.
(Editing by Himani Sarkar)