(Updates prices, adds London Brent, Iran comments)
By Felicia Loo
SINGAPORE, Jan 31 (Reuters) - Oil fell more than $1 to $91
a barrel on Thursday, roiled by worries of heavier financial
losses that would drain the U.S. economy and hurt demand at a
time when inventories of crude and gasoline are rising quickly.
U.S. light crude for March delivery <CLc1> dropped $1.09 or
about 1.2 percent to $91.24 a barrel by 0703 GMT, reversing a
gain of 69 cents on Wednesday's close.
London Brent crude <LCOc1> lost $1.06 a barrel to $91.47.
"People are looking at the U.S. crude oil stocks, which
rose heavier-than-expected and they are also worried about the
equity markets," said Tetsu Emori, a fund manager at Astmax Co
Ltd in Tokyo.
U.S. stocks fell on Wednesday, reversing strong gains after
the Federal Reserve slashed interest rates, after speculation
on financial television network CNBC that credit rating firms
would downgrade one or both of the two U.S. biggest bond
insurers.]
A credit downgrade could further harm the bank sector and
stunt the global economy as financial institutions take a hit
from subsequent writedowns of their assets.
The U.S. Fed cut rates by a hefty half-percentage point to
3 percent, the lowest since June 2005, and came just eight days
after the central bank slashed rates by three-quarters of a
point. The aggressive efforts were to halt a sharp slowdown in
an economy hit by a housing slump and a credit crunch.
A U.S. government report on Wednesday that showed a rise in
U.S. crude stocks, also brought prices down.
The Energy Information Administration said U.S. crude
stocks rose 3.6 million barrels last week to 293 million
barrels, rising for the third consecutive week, as opposed to a
forecast poll of 2.4 million-barrel build. []
Gasoline stocks also rose 3.6 million barrels to 224
million barrels, their highest level since February 2007, while
distillate stocks fell 1.5 million barrels to 127 million
barrels.
The forecast was for a lower build in gasoline at 1.9
million barrels and distillates to fall 1.7 million barrels.
The fact that the fall in distillate stocks was less than
expected signalled declining oil consumption in the United
States at a time of peak seasonal demand for heating.
But oil prices are expected to stay above $85 a barrel, on
a monthly basis, through June, even if OPEC keeps output close
to current levels when it meets this week, the EIA said on
Wednesday.
Iran Oil Minister Gholamhossein Nozari said on Thursday oil
markets were well supplied and he saw no need for the
Organization of the Petroleum Exporting Countries to boost
production at its meeting on Friday.
Hojjatollah Ghanimifard, international affairs director at
the National Iranian Oil Co told the daily Iran newspaper there
was no need for OPEC to increase output, as warmer spring
weather was approaching and extra crude would not bring down
prices.
(Editing by Ramthan Hussain)
