* EIA says U.S. crude stockpiles rise more than expected
* IEA cuts global oil demand from previous forecast
(Updates prices, adds EIA data)
By Farah Master
LONDON, Feb 11 (Reuters) - Oil pared earlier gains to fall
towards $37 a barrel on Wednesday after government data showed
that U.S. crude oil stockpiles rose by more than expected last
week on low demand from refineries.
U.S. crude <CLc1> was down 20 cents at $37.35 a barrel by
1600 GMT, having earlier set a session high of $38.44.
London Brent crude <LCOc1> fell 4 cents to $44.58.
U.S. crude stockpiles rose by 4.7 million barrels, higher
than analyst expectations of a 3.1 million barrel gain, the
Energy Information Administration (EIA) figures showed.
However, prices took support from data showing gasoline
demand rose 0.1 percent from the same time last year,
demonstrating demand could be stabilising after a prolonged
slide. Gasoline stocks fell by 2.6 million barrels, contrasting
with forecasts for a 600,000 barrel rise. []
"The numbers were definitely outside of expectations in a
bullish way for products and a bearish way for crude," said
Addison Armstrong, director of market research at Tradition
Energy in Connecticut.
SLOWING DEMAND
Even though gasoline supplies are lower, the weakness of
global demand remained a key focus for the market.
In its latest monthly report on Wednesday, the Paris-based
International Energy Agency said global oil demand was expected
to fall by 980,000 barrels per day (bpd) in 2009, more than its
previous forecast of a 500,000 bpd contraction. []
It linked the revision to the extreme weakness of the global
economy.
A slew of dismal economic data on Tuesday had dragged oil
back below the psychologically important $40 mark.
Until recently, many analysts predicted the relative
strength of the Chinese economy would help to sustain demand for
oil even though consumption has fallen sharply in developed
economies.
But on Wednesday, data from the General Administration of
Customs showed January crude oil imports to China, the world's
second-largest energy consumer after the United States, had
fallen by 8 percent to the lowest level for 15 months.
[
Leading oil exporter Saudi Arabia said current oil prices
were as unjustified and unsustainable as the record peak above
$147 a barrel hit in July last year. [ID:nN10330376]
The argument is that prices this low will limit investment
and lead to a market surge when demand eventually recovers.
"If today's low prices continue long enough, they will sow
the seeds for future price spikes and volatility," Saudi Oil
Minister Ali al-Naimi said in Houston on Tuesday.
(Additional reporting by Fayen Wong and Dharmasari Haroun in
Singapore; Editing by Anthony Barker)
