* Oil lower as Dolly unlikely to hit U.S. production
* Iran tensions continue to lend support
(Adds details, OPEC, analyst quote, updates prices)
By Annika Breidthardt
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 installations,
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 53 cents
to $130.51 a barrel by 0609 GMT, after gaining more than $3 a
barrel on concerns over Dolly in the previous session. London
Brent crude <LCOc1> fell 51 cents to trade at $132.10.
The world's top oil consumer has largely escaped the past
two Atlantic hurricane seasons. But it was pummeled in 2004 and
2005 when a series of powerful hurricanes, including Katrina,
ravaged Florida and the U.S. Gulf Coast.
Dolly was due to hit land on Wednesday near the border town
of Brownsville, Texas, well away from sensitive offshore
drilling rigs and production platforms.
"The market is relaxing on the back of that but I think it
also feels we will start to see more inventory builds as OPEC
production has ramped up," said Tony Nunan, risk management
executive at Tokyo-based Mitsubishi Corp.
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. []
"Last week the forecast was also for a fall, but we had a
big, big build," said Nunan.
Growing worries 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.
Iran's Oil Minister Gholamhossein Nozari, reiterating the
market was well supplied, said there would be no need for a cut
in OPEC output when the group meets in September because the
northern hemisphere's winter would by then be approaching.
[]
Tensions over Iran's nuclear enrichment programme also
continued to lend support.
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.
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.
(Reporting by Annika Breidthardt, Editing by Michael
Urquhart)
