* Rising prices may curb oil use in U.S., China
* Technicals show Brent to retrace to $119.79/bbl
[]
* Coming Up: ECB rate decision 1145 GMT
(Adds OPEC, IEA; updates prices)
By Florence Tan
SINGAPORE, April 7 (Reuters) - Brent crude dipped on
Thursday in Asian trade after five straight days of gains,
slipping below $122 a barrel on concern that rising prices will
hurt demand from the world's top oil consumers the United States
and China.
Unrest in oil exporting regions North Africa and the Middle
East continues to support prices, as investors fear the turmoil
could hamper more supplies after civil war interrupted the flow
from Libya.
Brent crude <LCOc1> fell 54 cents to $121.76 a barrel at
0511 GMT after rising to a 2-1/2-year high above $123 on
Wednesday.
U.S. crude futures <CLc1> declined 51 cents to $108.32 a
barrel, after touching $109.15 on Wednesday, the highest since
September 2008.
High crude prices are pushing up retail fuel prices
worldwide, exacerbating the inflationary pressure governments
face from the rising cost of food and raw materials.
"Current price levels should have a negative impact on
demand," said Tetsu Emori, a Tokyo-based commodities fund
manager at Astmax Investments.
The International Energy Agency said on Wednesday that the
current oil price is harming global economic growth and is a
mounting concern for consuming nations. []
Saudi Arabia and the United Arab Emirates have raised output
to compensate for supply loss from Libya but there has been no
coordinated supply policy response from OPEC to rein in high
prices. []
"The nature of this lack of response and general drift of
recent policy statements suggests that producers are a long way
from seeking actively to bridle in the upside for prices,
leaving the door to $130 Brent swinging open," analysts at
Barclays Capital led by Paul Horsnell said in a note.
The latest data from the United States showed that gasoline
and distillate demand has stalled while China raised retail
prices to record highs to ease the burden of higher crude prices
for state refiners
U.S. government data on Wednesday showed gasoline demand at
the world's top oil consumer fell 1.2 percent from year-ago
levels. Gasoline demand should pick up as the driving season
begins in the United States, but high prices would temper growth
in consumption. []
"(U.S.) demand will be challenged as higher retail prices
and little wage growth lead to a rising burden of gasoline
spending in U.S households' budget and disposable income,"
Harry Tchilinguirian, head of commodity markets strategy at BNP
Paribas, said in an overnight note.
Gasoline stocks fell less than forecast while a rise in
crude oil stocks were in line with expectations.
Tightening monetary policy in Europe could also slow demand
for raw materials there. The European Central Bank was expected
to announce a rate rise later on Thursday. []
CHINA RAISES PRICES
China, the world's second largest oil consumer, announced on
Wednesday it will increase retail gasoline and diesel prices by
up to 5.5 percent to ensure refiners produce enough to meet
demand. []
Analysts said the hike was too late and insufficient to
cover crude costs which have risen around 20 percent since
February. The disparity means the margins of state-owned
refiners are squeezed, which eventually may encourage them to
slow rather than increase supplies.
"China still has some subsidies around oil and petrol prices
relative to other countries," said Ben Westmore, commodities
analyst at the National Australia Bank, adding that it remained
to be seen if the price hikes would hurt demand.
"It really comes down to margins more than the actual end
price for oil. If the price of imports mean more expensive
crude, then it's more likely that they are not going to put it
through the refineries."
In contrast, South Korea, the world's fifth largest crude
oil importer, has put pressure on refiners to cut retail oil
prices as part of its battle against inflation. []
Uncertainty in the oil market and concern that the rally may
have run its course for now has thinned recent trade volumes.
Volatility has subsided after surging in early March, Reuters
data showed.
"There's risk on the upside and downside. It's probably
caused a lot of market participants to wait and see," Westmore
said.
(Editing by Ed Lane)
