LONDON (Reuters) - Oil fell on Tuesday, weighed down by forecasts of rising U.S. crude inventories as icy weather eases, but persistent outages in Libya and other exporters underpinned global prices.
An easing of the severe chill over the United States is likely to cut heating-fuel demand, which has bolstered oil in recent weeks. But investors are also looking to an increase in appetite for gasoline ahead of the U.S. summer driving season.
Brent crude fell 40 cents to $110.24 a barrel by 1330 GMT, after settling at its highest for the year in the previous session. U.S. oil dropped $1.22 to $101.60 after ending 62 cents higher.
"Inventories were up and that's played into the U.S. drop a little bit," said Simon Wardell, oil analyst at Global Insight.
"Slightly longer term the picture looks weaker for crude just for seasonality reasons. You're going to take a little bit of heating oil demand out and refineries will begin undergoing maintenance. You always inevitably get a slight drop of demand at this point in the year."
U.S. commercial crude stocks were expected to have risen 1.4 million barrels on average for the week to February 21, according to a Reuters poll taken ahead of weekly inventory reports from the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA).
That would mark a second straight week of builds as crude oil stocks rose about 1 million barrels to 362 million barrels in the week to February 14, while crude imports fell 508,000 bpd to 7.36 million bpd.
Stocks of distillates, which include heating oil and diesel, were forecast to have fallen 1.5 million barrels on average last week, in the latest survey. Gasoline stocks were also seen down 1.5 million.
Investors are trying to assess whether an improving U.S. economy will boost gasoline sales enough to offset the fall in distillates consumption and help to bolster crude oil demand.
"U.S. crude is near four-month highs, at some point the demand for it is going to diminish. There's a chance we'll see a fall to $100 a barrel and maybe even lower," said Michael Hewson, market analyst at CMC Markets.
"On Brent it's the same old problem, we're underpinned on the downside by geopolitical concerns and supply concerns."
Libya has put some government departments under special spending rules as a slump in oil revenue has hampered the drafting of a budget for this year. Protests at oilfields and ports have knocked oil production down to 230,000 barrels per day (bpd) from 1.4 million bpd in summer.
Fighting in South Sudan has seen oil output fall by a third since December to about 170,000 bpd last week.
Source: Reuters
