* Concerns over weak U.S. economic outlook and demand
impact
* Tropical storm causes minor disruptions to operations
* Nigeria unrest, Turkey pipeline blast may support prices
(Adds updates on prices)
SINGAPORE, Aug 6 (Reuters) - Oil fell to a three-month low
on Wednesday, as lingering worries of a weak U.S. economy
continued to weigh on demand, but conflicts in Nigeria and
dispute over Iran's nuclear plan could counter the bearish
effects.
U.S. light crude <CLc1> fell by more than $1.00 to reach
$118.10 a barrel, its lowest since May 5, before recovering to
$118.63, down 54 cents at 0547 GMT.
This represents a drop of nearly 20 percent from mid-July's
record high at more than $147.
London Brent crude <LCOc1> shed 50 cents to $117.20 a
barrel.
As oil prices plunged, the dollar climbed to seven-week peaks
against the euro and a major currency basket on Tuesday.
[].
"Western countries are struggling with high inflation,"
said Gerard Rigby of Fuel First Consulting in Sydney. Such a
battle would tend to put the brakes on consumer spending.
In the United States, Tropical Storm Edouard, the fifth of
the 2008 Atlantic hurricane season, hit the Texas coast without
causing any major disruptions to U.S. energy operations, which
also helped to squash concerns and bring prices down.
The storm caused minor oil and natural gas outages as it
passed through the U.S. Gulf of Mexico, and companies began to
fly evacuated staff back to rigs. []
Expectations of rising supplies in the United States
weighed on sentiment.
A Reuters poll of analysts forecast U.S. government weekly
inventory data to be released on Wednesday to show a
300,000-barrel rise in crude inventories, a 2.1 million-barrel
increase in distillates, and a 1.2 million barrel draw in
gasoline stocks. []
MEASURED FALL
"Prices will remain on the downward trend but I don't think
they will fall that much, but be rangebound around $118-$120 a
barrel," Rigby said.
This was because geopolitics, which continued to pose a
threat to oil supplies, and demand in India and China, could
counter the bearish impact, he added.
New supply fears have also emerged after a blast on the
Baku-Tbilisi-Ceyhan pipeline on Tuesday night in eastern
Turkey, prompting authorities to halt oil flows along the
pipeline, whose capacity was set to rise to 1.2 million barrels
per day (bpd) this year, state-run Anatolian news agency said.
[]
Iran, the world's fourth-largest oil producer, delivered a
letter to world powers on Tuesday but gave no concrete reply to
a demand to freeze its nuclear activity, a defiant step the
United States has warned could lead to more sanctions.
[]
Tehran says it is only seeking to master nuclear technology
to generate electricity and has repeatedly refused to halt its
atomic work, prompting the U.N. Security Council to impose
three rounds of penalties on Iran since 2006.
In Nigeria, the world's eighth-largest oil exporter,
militant attacks and security concerns in the Niger Delta were
causing the country to lose an average of 650,000 barrels of
crude production per day. []
The Paris-based International Energy Agency says
consumption, which remains strong in emerging countries, will
push oil demand higher this year, despite the global slowdown,
leaving supplies as its main worry.
"Our biggest worries are Nigeria, the hurricane season, etc
... We cannot relax too much. There is very robust demand in
China, India and the Middle East," Nobuo Tanaka, executive
director of the IEA, adviser to 27 industrialised countries,
told Reuters on Tuesday [].
The IEA expects oil demand to grow this year by 890,000
barrels per day, its latest monthly oil report shows.
(Reporting by Seng Li Peng; Editing by Ramthan Hussain)
