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Brent oil falls on weak U.S. data, OPEC eyed

Published 06/02/2011, 12:30 AM
Updated 06/02/2011, 12:32 AM
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* OPEC to discuss output increase next week-report[ID:nN01216874]

* OPEC unlikely to increase output-Reuters poll [ID:nLDE7501AO]

* Coming Up: EIA weekly petroleum stocks; 1500 GMT

By Seng Li Peng

SINGAPORE, June 2 (Reuters) - Brent and U.S. crude oil declined for a second day on Thursday on a surprise gain in U.S. crude stocks, weak jobs data in the world's top crude importer and a report that OPEC will meet next week to discuss a 1.5 million barrels per day (bpd) output increase.

Brent oil fell toward $114 a barrel, while U.S. oil slipped below $100 around 0425 GMT on the combination of bearish factors and continued concerns about the Greek debt crisis.

Pipeline disruptions had helped oil rally $2 on Tuesday, but TransCanada Corp said it expects to restart its 591,000 barrel per day (bpd) Keystone pipeline after the second spill in less than a month forced it to shut on Sunday.[ID:nN01176122]

"We have negative economic news of various types that led to not only to this fall (in prices) but also the stock market," said John Vautrain of consulting firm Purvin & Gertz.

"The news is about the economy slowing. But it's not all that negative in terms of crude oil demand. It's more psychological."

OPEC

OPEC will discuss increasing oil output by up to 1.5 million barrel per day (bpd) when it meets next week, industry publisher Energy Intelligence reported on Wednesday. [ID:nN01216874]

An output increase would be at odds with a Reuters poll predicting the Organization of the Petroleum Exporting Countries would roll over its current output agreement, untouched since a record cut in December 2008.

Iran said on Wednesday preserving OPEC's production ceiling was the only way to control the oil market, the semi-official Mehr news agency quoted Iran's OPEC governor Mohammad Ali Khatibi as saying. [ID:nMOS136339]

"OPEC understands that over supplying the market will drive the market down," said Vautrain, who added that a fall in prices is not in everybody's interest.

CRUDE STOCKS, GLOBAL ECONOMY

Crude was also buffeted by a jump in U.S. crude oil stockpiles of 3.5 million barrels last week, according to the American Petroleum Industry report.

The U.S. Energy Information Administration is set to release its estimates of petroleum stocks at 1500 GMT on Thursday.

Private employers in the United States added a paltry 38,000 jobs in May, below expectations and the lowest level since September 2010, while the pace of U.S. manufacturing sector growth slowed more than expected to its lowest level in more than 1-1/2 years. [ID:nEAPA10EH0] [ID:nN01129608]

Factory growth around the world weakened last month, surveys from Europe to Asia showed, raising concerns that important export markets for U.S. companies are drying up. For details, see [ID:nLDE7500VU]

The dollar strengthened in early Asian trade against a basket of currencies , but weakened against the euro .

On Wednesday Moody's cut Greece's credit rating by three notches to an extremely speculative level on debt restructuring worries and warned that more downgrades could come, dashing speculation that any European-brokered deal to loan the country more money would come easily. [ID:nLDE75038N] (Editing by Ed Lane)

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