Crude falls before energy inventory report

LONDON (Reuters) -- Benchmark Brent crude oil fell for a third day Wednesday ahead of U.S. data expected to show another drop in gasoline stocks in the world's top consumer in the run-up to peak summer demand.

London Brent crude was down 61 cents to $65.32 a barrel after a fall of $1.32 on Tuesday. That brought the loss to more than 5 percent this week, partly on news that Nigeria hopes to restart some fields shut by militant attacks.

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U.S. crude was down 37 cents at $62.73 after losing 51 cents on Tuesday. Brent's faster drop has narrowed its premium over U.S. crude, currently seen as a less reliable guide to world prices because of swollen stocks at its delivery hub.

Brent's fall has brought it toward the lower end of the $4 range, where it has traded since late March.

"Perhaps it's a matter of some taking of profit ahead of the stats," said Harry Tchilinguirian of BNP Paribas. "People are waiting for statistics to show the relative strength of the gasoline market."

An unexpectedly big fall in gasoline stocks shown by U.S. data last week helped drive a rally in crude prices as the United States heads toward the summer, when more travel pushes up demand for the motor fuel.

Gasoline stockpiles are seen falling 2.1 million barrels in data due later Wednesday, a Reuters survey of analysts showed, which would take stocks down for the 10th week on both strong demand and refinery glitches.

The survey forecast crude inventories would climb 500,000 barrels as imports rose to offset increased refinery production.

A leak in a pipeline carrying crude from Canada to the U.S. Midwest on Sunday spurred worries over U.S. crude supplies, but operator Enbridge Inc. said the pipe could be restarted Wednesday.

Nigeria Question

Prospects have grown for more gasoline-rich oil from Nigeria on news the 380,000 barrel per day (bpd) Forcados oilfields could start to come back onstream as early as this month, following a year's closure due to militant attacks.

Nigerian Energy Minister Edmund Daukoru said Wednesday that Forcados would resume operations at the end of May.

Daukoru added that a rise in global oil demand may soak up the extra Nigerian supplies, appearing to suggest the country might not cut output from elsewhere as a way to ensure Nigeria keeps meeting its OPEC production target if Forcados restarts.

"OPEC might agree to increase production, but I don't want to speculate. But if demand goes up we want to sell too," Daukoru told reporters in London.

Markets are still waiting for confirmation on Forcados from its operator, Royal Dutch Shell, which has repeatedly declined comment.

Traders are also on alert over violence in Nigeria, fearing that presidential elections on April 21 could lead to more output disruptions in the world's eight biggest exporter.

Nigeria's government on Wednesday rejected an opposition call to postpone the presidential ballot after flawed state elections at the weekend. Troops battled Islamic militants in north Nigeria, but that is far from the coastal oil region.

Iraq's oil minister said Wednesday the cabinet will present an oil law next week that aims to lure billions of dollars in foreign investment needed to boost oil output. Prime Minister Nuri al-Maliki said Iraq planned to take nationwide security control from foreign forces by the end of 2007.

Crude prices affect the prices of stocks such as BP (Charts), Exxon Mobil (Charts), ConocoPhillips (Charts), and Chevron (Charts).