* Slip in U.S. consumer sentiment hits oil market
* Fall in US consumer prices suggests sluggish demand
* Chance of two cyclones forming 10 percent
(Updates with settlement prices, storm details)
By Brian Ellsworth
NEW YORK, July 16 (Reuters) - Oil fell to around $76 a
barrel on Friday, dropping alongside equities markets as weak
U.S. consumer sentiment and falling consumer prices lowered
investor appetite for risk.
Data released on Friday showed U.S. consumer prices fell
for a third straight month while consumer sentiment tumbled to
an 11-month low, helping push down both oil and equities.
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Falling consumer prices can be a sign that an economy is in
deceleration, which would reduce demand for oil. Low consumer
sentiment implies less consumer demand for goods and services,
which would likewise hurt oil demand.
U.S. crude for August <CLc1> settled down 61 cents to
$76.01 a barrel, closing the week 8 cents lower than the
previous week. Prices reached an interday high of $77.15.
London Brent's new front-month September crude oil futures
contract <LCOc1> was down 72 cents to $75.37.
"It's really the demand-side story that is driving
the-day-to day price swings," said Tim Evans, energy analyst
for Citi Futures Perspective. "The thing that is directing
traffic here for the oil market is whether the S&P is up or
down."
The S&P 500 and the Dow Jones industrial average were both
down more than 2 percent in afternoon trading, spurred by
lackluster earnings and the sluggish economic data.
That data overshadowed a decline in the U.S. dollar, which
is usually bullish for crude because it makes oil cheaper for
buyers that hold other currencies.
Traders also shrugged off news of possible storms that
could disrupt Gulf of Mexico oil operations.
The U.S. National Hurricane Center said two low pressure
systems, one in the Gulf of Mexico and one east of Nicaragua in
the Caribbean Sea, each had a 10 percent chance of becoming the
season's next tropical cyclone during the next 48 hours.
It was days away from potentially entering the oil-rich
Gulf of Mexico.
U.S. crude prices have traded in a range between $71 and
$80 a barrel for almost six weeks as volatility related to the
European debt crisis dwindled. This week they have found
support near the $75 per barrel range.
"Near-term crude fundamentals continue to look supportive
as refinery runs remain on the rise, particularly in Asia
following seasonal maintenance," said J.P. Morgan in a research
note.
Over the year, prices have stayed within a $23 span,
hitting a 19-month peak above $87 and a trough below $65, both
in May.
For a technical view, click []
(Additional reporting by Robert Gibbons in New York, David
Turner and Joe Brock in London and Alejandro Barbajosa in
Singapore; Editing by Alden Bentley)
