Oil holds most of Monday's big losses
Crude settles above $60 after Monday's 4% decline because of expected U.S. stockpile increase.
LONDON (Reuters) - Oil prices held most of the previous day's slump Tuesday as forecasts for another rise in U.S. crude stocks countered concern that tension over Iran's nuclear work may disrupt supply.
U.S. light sweet crude for April delivery settled 15 cents higher at $60.57 a barrel, following a drop of nearly 4 percent on Monday. Crude for May delivery settled up 38 cents at $62.34 a barrel.
London Brent crude was up 86 cents at $62.20, after falling almost $2 the previous day.
U.S. crude supplies are expected to show another hefty rise of 2.5 million barrels when the government releases its oil data on Wednesday, analysts polled by Reuters said. That would be the sixth consecutive weekly increase.
Analysts predicted a 2.2 million-barrel drop in distillates stocks, which include heating oil, but said the decline was seasonal. Gasoline inventories are also forecast to drop an average 1.2 million barrels.
Crude inventories have swelled in part because of a tide of imports in recent months that has given the world's top consumer a thick buffer against supply disruptions.
Stockpiles of crude in the Gulf Coast, the heart of the nation's oil industry, are at their highest level since 1990, the Energy Information Administration (EIA) said.
Support at $60
Even at $60, oil prices are about twice where they were two years ago as rising world demand stretches producers and refiners, eroding the world's reserve production capacity to counter an extended supply outage.
Prices will not drop too far, some investors said.
"We're not expecting to see a material fall in the oil price," said Finlay MacDonald, who helps manage over $30 billion at Britannic Asset Management in Glasgow, including shares of BP (Research) and Royal Dutch Shell.
"The conditions we are in at the moment are likely to persist for some time."
Real and threatened supply breaks, including attacks on Nigeria's oil industry and concern the dispute over Iran could affect exports from the world's fourth-largest supplier suggest moves below $60 will not last, some analysts said.
"The market's had a crack at $60 several times recently, but not looked at all convincing below that level," said Kevin Norrish, analyst at Barclays Capital. "I just don't think there's the appetite to push it down there."
Iranian President Mahmoud Ahmadinejad said on Monday that Tehran will stand by its right to obtain nuclear technology and anyone spreading propaganda against its atomic program will come to regret it.
"No one can take away our nuclear technology. The Iranian nation has obtained it and will preserve it," he said in a televised address to mark the start of the Iranian year.
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