UPDATE 8-Oil falls 2 pct, U.S. consumer confidence weighs

                                
 * U.S. consumer confidence drags down markets
                                
 * Saudi Aramco chief says oil demand drop temporary
                                
 * U.S. crude stocks seen down, products up -Reuters poll
 (Updates prices, U.S. oil inventory poll)
                                
 NEW YORK, July 28 (Reuters) - Oil prices fell nearly 2
percent on Tuesday after data showing a drop in U.S. consumer
confidence spurred concerns about the economy and sent
investors into safer havens.
                                
 An index of U.S. consumer confidence dropped to 46.6 in
July from 49.3 in June, below analyst expectations of 49.0,
recording its second consecutive decline as sentiment remained
hampered by a difficult job market. [ID:nN28130084]
                                
 The decline in sentiment, as well as disappointing
corporate earnings results, pushed stock markets [.N] lower,
while the dollar and the yen gained as investors dumped riskier
assets. [USD/]
                                
 U.S. crude <CLc1> traded $1.24 lower at $67.14 a barrel at
2:02 p.m. EDT (1802 GMT), while London Brent <LCOc1> fell $1.04
to $69.77 a barrel.
                                
 "The petroleum markets are backing off from the highs,
seemingly prepared, along with the S&P 500, to at least take a
break from the recent rally," said Tim Evans, analyst at Citi
Futures Perspective in New York.
                                
 Optimism that a turnaround in the global economy could lift
slumping fuel demand has supported crude prices this year.
Crude fell from record highs near $150 a barrel last July to
below $33 a barrel in December as the recession battered world
consumption.
                                
 A Reuters poll of analysts forecast oil prices will average
$73 a barrel next year, up from an average 2009 price
prediction of $58.23 a barrel. [ID:nLO182859]
                                
 The chief executive of Saudi Aramco, the state oil company
of OPEC kingpin Saudi Arabia, expressed confidence the global
fall in oil demand was temporary and that consumption growth
would eventually resume. [ID:nLS516396]
                                
 Leading U.S. refiner Valero Energy Corp <VLO.N> said it
would run its 16 plants at 78 percent of capacity in the third
quarter, however. Weak demand has hit profits for refiners,
causing them to throttle back on output. [ID:nN28147582]
                                
 The wild swings in oil prices have pushed the U.S.
Commodity Futures Trading Commission to consider setting
position limits for crude and other finite commodities.
                                
 Officials from IntercontinentalExchange Inc <ICE.N> told
the CFTC in testimony that volatility and price distortions
could increase unless new measures are thoroughly vetted.
[ID:nN28126045]
                                
 Investors were also awaiting U.S. weekly oil inventories
data from the American Petroleum Institute due out late Tuesday
and data from the U.S. Energy Information Administration data
due out on Wednesday.
                                
 An expanded poll of analysts by Reuters forecast the
reports would show a 1.3 million barrel drop in crude stocks
for the week to July 24. Gasoline stocks were seen rising by
400,000 barrels and distillate stocks were forecast up by 1.3
million barrels. [EIA/S]
                                
(Reporting by Matthew Robinson, Robert Gibbons, and Gene
Ramos in New York; Joe Brock in London; Editing by Marguerita
Choy)