* OPEC might cut in May - Iran's OPEC Governor
* U.S. crude inventories likely rose for seventh week
* Focus on further U.S. economic indicators, equities
* U.S. crude for May delivery expires on Tuesday
(Updates prices
By David Sheppard
LONDON, April 21 (Reuters) - Oil dropped nearly $2 on
Tuesday to around $44 barrel, after an almost 9 percent fall the
previous day, as traders awaited more clues on demand from U.S.
economic, corporate and oil inventory data.
The focus was back on the state of the economy in
the world's biggest energy consumer after Bank of America
<BAC.N>, the largest U.S. bank, posted a jump in bad loans,
sending equity markets and most commodities down.
Shares on Wall Street and Asia fell sharply, but European
shares were firmer on Tuesday after British supermarket giant
Tesco showed its resilience to the downturn, reporting a 10
percent jump in profits to a record $4.6 billion. []
U.S. crude for May delivery <CLc1>, which expires later on
Tuesday, dropped $1.58 to $44.30 a barrel by 1337 GMT, after
plunging $4.45 on Monday. London Brent crude <LCOc1> fell $1.13
o $48.73.
"Oil fundamentals are not tight enough to carry crude above
$55 a barrel and as soon as the combined support of strong
equities and weak dollar goes missing then crude oil starts to
move back," Petromatrix analyst Olivier Jakob said.
Strength in the dollar contributed to oil's sharp fall on
Monday, as dollar-priced commodities become more expensive for
holders of other currencies.
The Chicago Board Options Exchange Volatility Index <.VIX>,
Wall Street's barometer for fear, jumped more than 15 percent on
Monday, the largest daily percentage gain since Jan. 20.
OPEC
Oil has been trading in a tight band between $46 and $55 for
the past month, after rallying steadily since mid-February from
the mid-$30s, helped by hopes of economic recovery and OPEC's
high compliance with agreed supply cuts.
The Organization of the Petroleum Exporting Countries meets
again on May 28.
Iran's OPEC governor said on Tuesday the producer group may
decide to further cut its oil output if the oil market continued
to remain oversupplied, and expressed concern consumer countries
are stockpiling oil due to lower prices.
"OPEC may decide to further cut its output in its next
meeting if the market remains oversupplied," Mohammad Ali
Khatibi told reporters.
"Consumer countries are increasingly stockpiling oil."
The producer group has cut member output quotas by 4.2
million barrels per day since September in a bid to underpin
prices as the global slowdown has cut demand.
Despite OPEC's efforts, crude oil inventories in the United
States have risen to the highest level since September 1990.
Traders will be eyeing an early snapshot of this week's U.S.
oil inventory data, with the American Petroleum Institute due to
release figures later in the day ahead of the more authoritative
numbers from the Energy Information Administration on Wednesday.
U.S. crude oil inventories likely rose for the seventh week
in a row last week on higher imports and as seasonal maintenance
cut refinery demand, a preliminary Reuters poll showed. []
On average, the poll forecast a crude inventories increase of
2.6 million barrels, an 800,000 barrel drawdown in gasoline
stocks and a 500,000 barrel fall in distillates.
(Additional reporting by Chua Baizhen in Singapore; editing by
James Jukwey)
