May 7, 2013 / 5:26 AM / 5 years ago

UPDATE 10-Oil down after rally on German data, Mideast tensions

* U.S. equity markets rise
    * U.S. crude stocks forecast higher on imports - poll
    * U.S. EIA says non-OPEC fuel production to increase
    * Coming Up: EIA inventory data Wednesday 10:30 a.m. EDT
(1430 GMT

 (Adds API data and trading volume information, paragraphs
    By Anna Louie Sussman
    NEW YORK, May 7 (Reuters) - Brent crude oil fell more than
$1 on Tuesday as worries about market fundamentals curbed an
early rise that had brought the price close to $106 a barrel on
strong German data and concern about tension in the Middle East.
    Fears of supply disruption after the Israeli air strikes on
Syria close to Damascus boosted Brent early in the session, and
it got close to the highest level in nearly a month following
its largest three-day rally since August 2012.
    Those fears subsided and Brent fell in the absence of clear
signs of strengthening global demand, traders said. In a monthly
report, the U.S. Energy Information Administration (EIA), a
government body, cut its forecasts for oil consumption in 2013
and 2014 due to declines in Europe and Japan. 
    "We're getting into an area where we've had such a strong
run-up in price over the past few days, when really from a
fundamental standpoint it's hard to justify. We got up here on a
lot of froth," said Stephen Schork, editor of The Schork Report
in Pennsylvania. 
    Brent crude fell $1.06 to settle at $104.40 a
barrel. During the session it reached $105.94, its highest since
April 11. Brent has rebounded over $5 a barrel since falling
below $99 last Wednesday. 
    It continued its slide in post-settlement trading, falling
to $104.09 at 4:44 p.m. (2044 GMT).
    U.S. oil futures lost 54 cents to settle at $95.62.
    The spread between Brent and U.S. crude largely traded in a
range between $9 and $10 throughout the session. It widened out
to above $10 early on, the first time it went above $10 since
April 29, before settling at $8.78.
    Traders are watching for the startup of the 405,000-bpd BP
Whiting refinery in Indiana which was estimated to come back
online by the end of June. Industry group Genscape reported weak
heating from both of the refinery's furnace stacks, indicating
possible testing. 
    Positive data on German industrial orders rising again in
March helped to lift prices in earlier trading. 
    Oil prices trended lower beginning around 10 a.m. EDT (1400
GMT), tracing losses on the S&P 500 and the Dow Jones
industrial average. But they parted ways with equities
around 11 a.m. EDT (1500 GMT) as stocks rallied to intraday
highs, led by gains in the materials and energy sectors.
    The American Petroleum Institute, an industry group, said
Tuesday that U.S. crude stocks were up 680,000 barrels, far less
than the 1.9 million barrel build forecast by a Reuters poll of
12 analysts.  
    Traders are awaiting Wednesday's more closely watched report
from the EIA. 
    After lighter trading Monday, a bank holiday in the United
Kingdom, Brent volumes were up Tuesday at 12 percent higher than
the 30-day moving average. U.S. crude volumes were lighter, at 9
percent lower than the 30-day moving average.
    Attention focused again on China, the world's second-largest
economy, ahead of preliminary April trade data due on Wednesday.
    China's crude oil imports last month were expected to have
held near March levels, which were 2.1 percent lower than a year
    Chinese inflation data on Thursday and money supply and loan
growth figures expected Friday will also be watched.

 (Additional reporting by Robert Gibbons in New York, Simon
Falush in London; editing by Jim Marshall and David Gregorio)
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