* U.S. gasoline stocks rise ahead of July 4 holiday
* Non-farm payrolls the next economic clue
* Qatar to raise crude allocations to Asia
(Updates with U.S. payroll data)
By Barbara Lewis
LONDON, July 2 (Reuters) - Swelling gasoline stocks and a
much bigger than expected rise in U.S. unemployment drove oil
markets down more than a dollar on Thursday to below $68 a
barrel.
In the latest signal the economy of the world's biggest
energy consumer was still week, data on Thursday showed U.S.
employers had cut 467,000 jobs in June and the unemployment rate
had risen to 9.5 percent. []
U.S. crude <CLc1> fell $1.08 to $68.23 a barrel by 0956 GMT.
The contract settled 58 cents lower at $69.31 on Wednesday.
London Brent crude <LCOc1> dropped by 92 cents to $67.87.
"There's a sense we're breaking to the down-side because of
weak economic data ... unemployment, house prices, lower stock
markets," said Christopher Bellew of Bache Commodities.
In addition he cited Wednesday's U.S. government inventory
data that showed gasoline stockpiles in the United States rose
by 2.3 million barrels last week. []
Distillates, including diesel, also rose by 2.9 million
barrels, although crude stocks dropped by 3.7 million barrels.
Traders viewed the increase in motor fuel ahead of the U.S.
July 4 Independence Day holiday -- which traditionally marks the
peak of the U.S. summer driving season -- as a symptom of
continued demand weakness.
Some analysts are still relatively bullish, however, and say
the Organization of the Petroleum Exporting Countries has been
very successful in stabilising the market.
Oil has rallied from a low of $32.40 in December last year
to highs above $70 a barrel in June, although it is only around
half last July's record of more than $147.
Over the second quarter of this year it gained around 40
percent -- the strongest quarterly gain since 1990.
OPEC SUPPORT
"Everybody has been surprised at the effectiveness of the
OPEC cuts," said Angus McPhail of British-based investment firm
Alliance Trust.
"We're in a normalised range somewhere between $60 and $80
in the current environment, excluding the Iranians kicking
off... Nigeria etc... I think that's what we're looking at and
it's what OPEC's looking at too."
Political unrest in oil producer Iran has had little impact
on prices because the oil market is well-supplied and there is
no expectation of Iran cutting off supplies.
Militant unrest in OPEC member Nigeria has had a bigger
impact. It has forced the shut-in of an estimated 600,000 to
700,000 barrels per day (bpd) [].
The involuntary output reduction has improved OPEC's
compliance with production curbs, although discipline has
retreated from a peak of around 80 percent earlier this year.
Reuters' latest OPEC survey [] assessed compliance at
around 72 percent of promised cutbacks totalling 4.2 million bpd
since September.
As output creeps higher, one of OPEC's smallest crude
exporters Qatar told at least two Asian term buyers it will
supply its Marine crude at full contracted volumes for August,
compared with 14 percent supply curbs for July, sources at the
firms said on Thursday. []
While the West has taken the brunt of economic downturn,
analysts have been looking to Asia to keep generating fuel
demand.
But the governments of China and India this week both
unexpectedly raised gasoline and diesel prices by as much as 10
percent, potentially capping demand growth.
[][]
(Additional reporting by Fayen Wong; editing by William
Hardy)
