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UPDATE 6-Oil dips below $70 as US summer gasoline fears ease

2009-06-17 16:10:53 GMT (Reuters)
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* U.S. gasoline stocks rise unexpectedly-EIA

* U.S. crude stocks fall more than expected-EIA (Updates prices, adds details)

By Joe Brock and Alex Lawler

LONDON, June 17 (Reuters) - Oil prices fell below $70 a barrel on Wednesday, after a U.S. government report showed a surprise increase in gasoline supplies in the world's top consumer heading into summer driving season.

U.S. crude for July lost 74 cents to $69.73 a barrel by 1545 GMT, having earlier fallen as low as $69. Brent crude for August slipped 52 cents to $69.72 a barrel.

The losses came after the U.S. Energy Information Administration reported that domestic gasoline stocks rose by 3.4 million barrels last week, defying expectations for a decline and easing worries about supplies as Americans gear up for summer road trips.

"The number was large enough to allay supply concerns for now," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

U.S. gasoline futures fell 6 cents to $2.0111 a gallon after the EIA report.

Oil's losses were tempered, however, by a larger-than-expected decline in crude stockpiles of 3.9 million barrels reported by the EIA, dealers said.

"There was a larger-than-expected draw in crude inventories, but the market is headed lower, and I think that's a result of product inventories building, especially gasoline," said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

U.S. crude oil inventories remain about 19 percent higher than a year ago, puffed up by months of soft demand triggered by the effects of the economic recession.

Earlier, oil prices fell as European shares slid for a fourth day as some investors unwound trades that had bet on a speedy economic recovery.

U.S. equities markets were mixed Wednesday.

Oil hit a 2009 high above $73 last week, lifted by expectations of economic recovery, which would increase fuel demand. But prices are still far below the record high above $147 reached last year. (Additional reporting by Reuters New York Energy Desk; Editing by Walter Bagley)

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