* Oil lower as Dolly unlikely to hit U.S. production
* Iran tensions continue to lend support
SINGAPORE, July 22 (Reuters) - Oil pared some of the
previous session's gains on Tuesday, as Tropical Storm Dolly
looked likely to miss major U.S. oil and gas production, easing
fears of supply disruptions from the first big storm threat of
2008.
Forecasters still expected Dolly to grow into a hurricane
before hitting land near the Mexican border later this week and
said it could threaten some coastal refineries later in the
week, limiting the extent of crude's losses. []
U.S. light crude for August delivery <CLc1> fell 67 cents
to $130.37 a barrel by 0105 GMT, after gaining more than $3 a
barrel on concerns over Dolly in the previous session. London
Brent crude <LCOc1> fell 56 cents to trade at $132.05 at the
same time.
Growing tensions over the health of the U.S. economy due to
the housing crisis and rising fuel costs last week pressured
oil prices, sending crude down more than 12 percent from this
month's all-time peak above $147 a barrel.
On Monday, concerns that Dolly could affect oil production
from the Gulf of Mexico buoyed crude futures. News that Shell
<RDSa.L> had been flying workers from platforms in the western
Gulf of Mexico since Sunday also helped push prices
higher.[]
Dolly, which sustained winds of nearly 50 miles per hour
(85 km per hour), emerged from the Yucatan Peninsula over the
warm waters of the Gulf of Mexico.
The world's top oil consumer, the United States, has
largely escaped the past two Atlantic hurricane seasons, with
just one hurricane -- Humberto in November 2007 -- making
landfall on its coasts.
But it was pummeled in 2004 and 2005 when a series of
powerful hurricanes, including Katrina, ravaged Florida and the
U.S. Gulf Coast.
Tensions over Iran's nuclear enrichment programme also
continued to lend support, further limiting crude oil's
downside potential.
"Oil markets are nervous that diplomatic tensions centred
on Iran's nuclear programme could flare again," commodity
strategist David Moore at Commonwealth Bank of Australia said
in a note to clients.
U.S. Secretary of State Condoleezza Rice warned Iran on
Monday that it faced more sanctions if it defied a two-week
deadline to agree to curb its nuclear programme.
[]
Major powers on the weekend gave Iran two weeks to answer
calls to rein in its nuclear programme or face tougher
sanctions after talks ended in a stalemate despite
unprecedented U.S. participation.
China, the world's No. 2 oil consumer, in June posted only
a modest 3.2 percent increase in imports of crude oil, but it
bought record amounts of diesel, the General Administration of
Customs said, confirming earlier data. []
Surging demand from emerging economies such as China and
India have fueled a sixfold rise in oil prices since 2002, but
concerns over flagging demand in the United States and other
large consumers have helped temper gains.
A Reuters poll of analysts ahead of weekly U.S. government
inventory data forecast U.S. crude stocks fell by 500,000
barrels last week, after unexpectedly rising 3.0 million
barrels in the previous week. []
(Reporting by Annika Breidthardt, Editing by Jacqueline Wong)
