* EIA weekly inventory data shows big rise in fuel stocks
* Distillates at highest level in nearly 25 years
* OPEC lowers its medium and long term demand forecasts
* G8 meets in Italy, focus on regulation
(Updates prices)
By Christopher Johnson and Barbara Lewis
LONDON (Reuters) - Oil dropped well over a dollar to below
$62 a barrel on Wednesday, placing it on course for a sixth
consecutive fall and the longest losing streak since
mid-December, after U.S. data showed a big rise in fuel stocks.
An OPEC report predicting it could take years for demand for
its crude to recover from the financial crisis added to bearish
sentiment. [].
U.S. light crude for August delivery <CLc1> dropped $1.24 to
$61.69 a barrel by 1444 GMT. It settled $1.12 lower at 62.93 a
barrel on Tuesday, ending a fifth straight day of losses.
London Brent crude <LCOc1> fell $1.15 to $62.08.
U.S. government weekly data showed gasoline stocks had risen
by 1.9 million barrels, more than expectations for a 600,000
barrel increase. []
Distillate stocks, including diesel, climbed by 3.7 million
barrels, compared with an expected two million barrel rise. They
stood at their highest level in nearly 25 years.
Figures from the American Petroleum Institute (API) late on
Tuesday also showed distillate stocks and gasoline stocks had
risen more than expected. []
"It looked like gasoline demand had started to get better
and now suddenly looks bad. It could be for a couple of reasons:
it could be a price response or it could just be that the
economy is just not out of the woods yet," said Tony Nunan, risk
manager at Mitsubishi Corp in Tokyo.
Oil prices have dropped from peaks above $70 a barrel last
month, the highest this year, as expectations of an early
economic recovery have faltered and U.S. fuel stocks have risen
in line with subdued demand.
REGULATORY FEARS
The market was also monitoring the meeting of the Group of
Eight major industrialised nations in the central Italian city
of L'Aquila, which continues until Friday.
Oil analysts largely dismissed the G8 calls for reduced
volatility in energy markets. []
They said a statement from U.S. regulator the CFTC this week
that it was considering tougher position limits to try to curb
speculation [] was far more significant. It could
add to selling pressure, although it would take months for any
regulatory changes to take effect, they said.
"It does dampen sentiment," said Mike Wittner of Societe
Generale.
Analysts said the impact would be greater on U.S. crude than
on the European benchmark Brent, which is mostly overseen by
British regulator the FSA.
Brent's current premium to U.S. crude could also be
explained by the disruption of supplies of Nigerian oil, which
has helped to boost other Atlantic basin crudes, including
Brent.
Nigeria's most prominent militant group said on Wednesday it
had sabotaged oil pipelines, as it deepened a six-week long
offensive against Africa's biggest energy industry.
[]
The enforced shut-in of Nigerian crude has helped to tighten
supplies from the Organization of the Petroleum Exporting
Countries.
Discipline from the group has lapsed and compliance with
agreed output curbs has been estimated at around 75 percent,
down from peaks of roughly 80 percent earlier this year.
OPEC's 2009 World Oil Outlook released on Wednesday said
consumption of its crude would not return to 31 million barrels
per day (bpd), the level it averaged in 2008 before the economic
crisis cut oil use, until 2013.
In the medium term, consumption would fall to 84.2 million
bpd this year from 85.6 million bpd last year, and rise to 87.9
million bpd by 2013, the report said. The 2013 figure was 5.7
million bpd less than previously expected.
(Additional reporting by Maryelle Demongeot in Singapore;
editing by James Jukwey)
