(Updates prices)
SINGAPORE, May 28 (Reuters) - Oil was flat on Wednesday
after the previous day's slide as the dollar rose and dealers
braced for weakening demand from Asia as some smaller consumer
nations began to ease off subsidies by raising local fuel
prices.
U.S. crude <CLc1> inched up 4 cents to $128.89 a barrel by
0620 GMT, after dropping $3.34 on Tuesday, the first day of New
York Mercantile Exchange floor trade following Monday's
holiday. Oil has fallen since it hit a record high $135.09 last
week.
London Brent crude <LCOc1> dipped 6 cents to $128.25 a
barrel.
The U.S. dollar rallied on Tuesday and held firm on
Wednesday after April U.S. new-home data showed an unexpected
rise, triggering a slide in oil, grains and metals by investors
who had bought commodities to hedge against inflation. []
Prices have also been knocked off their peaks by growing
signs that consumers are struggling to cope with surging
prices.
"Prices are lower because the market is concerned over
demand growth," said Makoto Takeda of Tokyo's Bansei
Securities.
Soaring fuel costs have triggered a wave of protests around
the world, with convoys of trucks converging on London on
Tuesday, while in France fishermen blocked road and rail access
to the fuel depot of the country's largest oil refinery at
Gonfreville, owned by Total.
Oil traders were also watching carefully for signs of
falling demand in Asia, where smaller oil consumers Taiwan,
Indonesia and Sri Lanka have all recently raised domestic fuel
prices due to the soaring cost of subsidies as global prices
surge.
Analysts expect the impact of hikes to be limited, and
while India is also poised for a modest increase this year, the
world's second-largest oil consumer, China, appears set to
resist pressure to raise rates until after the summer Olympics.
[]
But demand in top consumer the United States and other
developed countries, such as Japan, is already under pressure.
DOLLAR EFFECT
Oil prices have jumped nearly 40 percent this year,
bolstered by a poor performing U.S. dollar as well as growing
fears about the industry's ability to keep pace with demand
over the next decade due to stagnating non-OPEC production
growth.
Long-term fears have overshadowed relatively healthy
inventory levels in big consumers like the United States, where
crude stocks were expected to have risen by 100,000 barrels
last week while gasoline stocks dipped by the same volume.
Inventories of distillates such as diesel and heating oil,
which have been the market's major driver due to robust demand,
were set to rise by 800,000 barrels, in line with seasonal
trends, a preliminary Reuters poll of analysts showed. []
The data from the U.S. Energy Information Administration is
due on Thursday, a day later than usual due to the holiday.
Rising prices have prompted some oil consuming nations to
urge OPEC to ramp up production. Cartel members insist
speculators, not a shortfall in supply, are driving prices and
say they will not meet ahead of their scheduled meeting in
September to discuss output policy.
(Reporting by Luke Pachymuthu; Editing by Clarence Fernandez)
