* Surprise rise in crude stocks pressures U.S. oil
* Weak U.S. durable goods, business spending weigh too
* Eyes on Mexico Gulf as cyclone said sure to hit
* Coming up: U.S. jobless claims, 8:30 a.m. EDT Thursday
(Updates prices, market activity)
By Gene Ramos
NEW YORK, July 27 Oil prices fell on Wednesday
as data showed the first release of crude from the U.S.
petroleum reserve unexpectedly pushed up domestic inventories
last week, adding to concerns over weak economic data.
U.S. crude inventories rose 2.3 million barrels, boosted by
the release of 2.268 million barrels of oil from the Strategic
Petroleum Reserve, part of a coordinated move by members of the
International Energy Agency announced in late June to cover
supply losses due to the conflict in Libya. [EIA/S]
Jitters over the higher stockpiles piled on top of fears
about the unsettled debate on raising the U.S. debt ceiling
before an Aug. 2 deadline to avoid a disastrous default.
Further pressure came as data showed new orders for
long-lasting U.S. manufactured goods fell unexpectedly in June,
and a gauge of business spending plans slipped.
"(The inventory report) was clearly a disappointment ...
although we are trading much more off of the problems of the
broader financial market and debt ceiling", said Bill O'Grady,
chief investment strategist at Confluence Investment Management
in St. Louis, Missouri.
U.S. crude weakened further against Brent oil, sending the
premium of Brent to U.S. futures CL-LCO1=R to above $20 a
barrel after ending below $19 on Tuesday, in spread trading,
U.S. crude for September delivery CLc1 fell $2.19, or 2.2
percent, to settle at $97.40 a barrel, having slid to a session
low of $97.28.
In London, ICE September Brent LCOc1 settled at $117.43,
down 85 cents, dropping from the day's high of $118.50.
Trading volumes were light, Reuters data showed. By 2:50
p.m. EDT (1850 GMT), U.S. volume was nearly 450,000 contracts,
26 percent below the 30-day average. Brent volume was around
368,000 contracts, 24 percent below the 30-day average.
GULF OF MEXICO STORM FEARS
The market eyed the development of a potential tropical
cyclone in the Gulf of Mexico, home to 29 percent of U.S. oil
production, which could impact supplies. [ID:nL3E7IR2EB]
As a precaution, Royal Dutch Shell (RDSa.L) pulled support
personnel in its area platforms while other companies monitored
the development. No production had been shut in. [ID:nWEN6263]
Near the close, the U.S. Federal Reserve, in its summary of
conditions across the country, said economic growth slowed in
much of the United States in June and early July, raising
doubts of a pickup in activity in the second half of the year.
Full coverage of U.S. budget and debt [ID:nUSBUDGET]
Reuters Insider TV http:link.reuters.com/zat72s
Chart on safe haven performance in July http://graphic/
COLUMN-Death of Treasury benchmark [ID:nN1E76O04X]
BREAKINGVIEWS-US can save its AAA rating [ID:nN1E76P1SC]
Deeply divided Republican and Democratic leaders in
Washington are still scrambling to find common ground with less
than a week before the government hits its borrowing limit,
triggering a possible default that would shake global markets.
"Should the U.S. default on its debt, the effect on the oil
markets will be bifurcated," said Jason Schenker, president and
chief economist of Prestige Economics LLC in Austin, Texas.
"For WTI (U.S. crude), prices will fall on economic growth
concerns. For Brent crude, which has a more global benchmark
status than U.S. crude, it will get support from a lower dollar
and continued global growth expectations," Schenker said.
Global stock markets fell as the United States edged toward
default. Wall Street slid as anxiety grew over the debt debate
in Washington and weak economic data stoked concerns about a
further slowing of the economy. [.N]
The dollar was up 0.9 percent against a basket of
currencies .DXY, rebounding as political wrangling over
raising the U.S. debt ceiling continued. [USD/]
(Additional reporting by Robert Gibbons and David Sheppard in
New York; Claire Milhench and Simon Falush in London; Editing
by Dale Hudson)