* U.S. crude, distillate stocks rise - EIA
* Weather seen milder this week
* Chinese monetary tightening a worry
(Updates prices)
NEW YORK, Jan 13 (Reuters) - Oil prices fell below $80 a barrel on
Wednesday, pressured by a U.S. inventory report showing rises in crude and
distillate fuel stocks despite severe winter weather.
Crude stocks, expected to rise by 1.2 million barrels, shot up by 3.7
million, the Energy Information Administration said. Inventories of
distillates, forecast to fall, rose by 1.4 million barrels. []
"It's a bearish report that points back to weak underlying fundamentals
in the domestic petroleum market," said Gene McGillian, analyst at
Tradition Energy in Stamford, Connecticut. "Distillate stocks are up
despite the cold weather last week, which means there was no demand for
anything except the heating oil."
U.S. crude for February delivery <CLc1> fell 89 cents to $79.90 a
barrel by 2:07 p.m. EST (1907 GMT). It earlier fell to $78.37, the lowest
since Dec. 29, but then rebounded with the rest of the oil complex.
In London, Brent crude for February <LCOc1> delivery, which expires on
Thursday, fell 88 cents to $78.42 a barrel.
The price of U.S. crude has fallen more than $4 from a 15-month high of
$83.95 reached on Monday and some analysts believe it could have farther to
fall.
"It is becoming increasingly apparent that the upside breakout above
key $82 resistance seen last week never got going and seems to have been no
more than a short-lived burst higher," Edward Meir of MF Global said in a
report.
Oil inventories have bulged in the United States over the past 18
months as the economic crisis has cut energy demand. Very cold weather over
the past two weeks was expected to have helped to erode stocks.
Warmer weather across the central and eastern United States is expected
to arrive in the next few days, DTN Meteorlogix said, reducing heating
demand. []
The EIA report followed figures from the American Petroleum Institute,
an industry group, which said on Tuesday that distillate stocks rose by 3.6
million barrels.
Investors have looked to wider economic data in recent months for signs
of economic recovery and a potential rebound in energy demand. On
Wednesday, U.S. stocks rose, lifted by a broker's upgrade of Merck & Co and
a higher profit outlook from Kraft Foods Inc. []
Oil was pressured on Tuesday by China's move to raise banks' cash
reserve requirements, the latest step towards tightening monetary policy,
which some traders see potentially dampening energy demand.
China is the world's second-largest oil consumer after the United
States.
(Additional reporting by Robert Gibbons, Gene Ramos and Joshua Schneyer in
New York, David Sheppard and Alex Lawler in London, Alejandro Barbajosa in
Singapore; Editing by John Picinich)
