* Rise in U.S. weekly in jobless claims
* Iran's nuclear stance, Nigeria violence in focus
(Updates prices)
By Jane Merriman
LONDON, July 31 (Reuters) - Oil retreated on Thursday, after
an early bounce, pressured by bearish data on the economy in top
energy consumer the United States.
U.S. light crude for September <CLc1> was down $2.32 at
$124.45 a barrel by 1408 GMT, after a jump of $4.58 on
Wednesday.
London Brent crude <LCOc1> was $2.95 down at $124.15 a
barrel.
An unexpected jump in U.S. weekly jobless claims put
pressure on the U.S. dollar, which briefly caused oil to make
further gains on Thursday, but these proved short-lived.
Oil has tended to rise when the dollar falls and vice versa,
but this pattern has shown signs of breaking down recently.
U.S. gross domestic product grew at a 1.9 percent annual
rate in the second quarter, lower than expected, which added to
concerns over the health of the U.S. economy.[].
Oil had rallied strongly on Wednesday after a surprise fall
in gasoline stocks last week in the United States. []
This followed a fall of about 18 percent from the market's
record peak above $147 on July 11, partly due to concerns over
demand erosion, especially in the United States.
This was the biggest drop on record in dollar terms.
"There was a gasoline-led rally, but now I think it's
running out of puff. It seems to need constant bullish news at
the moment to push it up," said Christopher Bellew, of Bache
Commodities. "Everyone is talking about demand destruction."
RECORD RUN
Oil's six-year advance has been driven partly by strong
demand growth from emerging economies such as China, India and
the Middle East that could tighten the market's supply/demand
balance over the long term.
Investors have piled into oil and other commodities as a
hedge against inflation and as a more attractive play than
bearish equity markets.
The weak U.S. dollar has also contributed to oil's record
run as it is priced in the U.S. currency.
Analysts are not yet convinced that the sharp fall this
month means the bull market in oil is over.
"Although oil prices have fallen around $20 from their peak,
support at $120 held and that means there is the potential for
prices to rise back to record levels again," said Shuji Sugata,
manager at Mitsubishi Corp Futures and Securities Ltd in Tokyo.
Analysts who track the market's movements on charts are
waiting to see if the price can continue to hold above the $120
a barrel level.
Political tensions that have helped underpin the market
returned to the spotlight when Iran said it would press ahead
with its nuclear development plans.
Western powers had given Iran two weeks from July 19 to
respond to their offer to hold off imposing more U.N. sanctions
if Tehran would freeze any expansion of its nuclear work.
Rival militant factions in Nigeria's oil-producing Niger
Delta have clashed this week in an apparent turf war, killing at
least four people.
The fighting illustrates the deteriorating security
situation in the Delta, the hub of Nigeria's oil industry, where
unrest has shut down around a fifth of output.
(Additional reporting by James Topham in Tokyo; editing by
Anthony Barker)
