(Recasts, updates prices, adds India raises fuel prices by 10
percent)
By Maryelle Demongeot
SINGAPORE, June 4 (Reuters) - Oil fell below $124 on
Wednesday ahead of U.S. data and as India raised its fuel
prices in response to record oil prices, extending losses one
day after prices slid almost 3 percent on the back of a
rallying dollar.
U.S. light crude for July delivery <CLc1> fell 90 cents to
$123.41 a barrel by 0735 GMT, after tumbling $3.45 a day ago,
taking it more than $10 below its record high two weeks ago.
Oil and other commodity markets fell after the dollar rose
close to a three-month high after Federal Reserve Chairman Ben
Bernanke's warning about the inflationary threat from a weak
U.S. currency, suggesting the potential for dollar-supportive
intervention.
London Brent crude <LCOc1> fell more than a dollar to
$123.44 a barrel.
"The big theme for today is the EIA report. We'll wait and
see what it holds," said David Moore, an analyst with
Commonwealth Bank of Australia.
The U.S. government's Energy Information Administration
(EIA) will release its weekly data at 10:35 a.m EDT (1435 GMT),
forecast to show bearish rises in both crude oil and products
inventories. []
Analysts polled by Reuters expect an 800,000-barrel rise in
U.S. crude stocks, a 1.4 million barrels increase in
distillates and a 400,000-barrel gain in gasoline inventories.
BEARISH SIGNS MULTIPLY
Oil has fallen from a record of $135.09 hit on May 22, on
mounting evidence that global energy demand is being hurt as
Asia, which has led growth in fuel consumption, is starting to
cut costly subsidies that have sheltered users from high
prices.
After Indonesia, Taiwan and Sri Lanka, which announced
subsidy cuts recently, India agreed to raise its petrol and
diesel prices by about 10 percent on Wednesday, curbing losses
at its state-owned refiners but stoking inflation and risking a
political backlash ahead of elections.
The cabinet also agreed to cut the import duty on crude oil
to nil from 5 percent []
Malaysia will also announce its fuel subsidy on Wednesday.
The government is expected to announce that it will scrap
fuel price controls in August, allowing pump prices to rise to
market levels and impose a system of quotas or cash handouts.
And in South Korea, President Lee Myung-bak has sounded alarm
bells over the sharp rises in oil, raw materials and food
prices, calling it an "uncontrollable situation".
The dollar was little changed on Wednesday, holding big
gains against the euro and major currencies made the previous
day. []
The dollar's trade-weighted index -- a gauge of its
performance against six major currencies -- was down 0.01
percent at 73.320 <.DXY> after surging as much as 1.3 percent
from Tuesday's lows.
Weakness in the U.S. currency has been one factor driving
investment in energy, agriculture and metals by encouraging the
buying of dollar-denominated commodities as a hedge against
inflation.
The U.S. Commodity Futures Trading Commission has unveiled
moves since last week to increase surveillance of the commodity
futures markets in a move that dealers said could trim the pace
of speculation. []
(Editing by Michael Urquhart)
