CORRECTED-UPDATE 10-Oil falls as economic worries, stock market pressure


(Corrects to say Brent touched $117.02 on Sept 17, not Sept. 1,in 8th paragraph)

* Turkey warns Syria about cross-border shelling

* IMF warns on global financial stability

* U.S. crude stocks rose, distillates fell last week-API

* Coming up: EIA oil data, 11 a.m. EDT Thursday

By Robert Gibbons

NEW YORK, Oct 10 (Reuters) - Oil prices fell in volatiletrade on Wednesday as ongoing concerns about the economy and aweak kick off to the earnings season weighed on stock markets.

Brent turned negative late as U.S. stocks fell after Alcoaposted a quarterly net loss and Chevron warned profits wouldfall sharply.

U.S. crude turned lower and ended down more than 1 percent.

Oil markets, which have been balancing concerns of lowerglobal fuel demand against the risk of supply disruptions in theMiddle East and loading delays of crude from the North Sea, also

watched demand forecasts from the U.S. government and theOrganization of the Petroleum Exporting Countries.

Reports released on Wednesday from OPEC and the U.S. EnergyInformation Administration (EIA) lowered global oil demandgrowth forecasts amid ongoing worries about economic growth.

Crude drew early support from news of shelling along theTurkey-Syria border, hostility between Iran and the West and animpending Israeli election. Those events reinforced fears aboutpotential threats to oil supplies from the Middle East Gulf.

"Although (U.S. crude) managed to further yesterday's MiddleEast driven price spike early in the session, it subsequentlysuccumbed to a triple digit slide in the (Dow Jones industrials)that sent off further caution flags regarding global economicrecovery," Jim Ritterbusch, president at Ritterbusch &Associates, said in a note.

PRICES FALLBrent November crude

traded down 17 cents to settleat $114.33 a barrel after trading as high as $115.59, thehighest since prices hit $117.02 on Sept. 17, according toReuters data.

U.S. November crude

settled $1.14 lower at $91.25 abarrel. U.S. crude earlier tested resistance above the $93.33peak from Oct. 1, after prices had stalled in consecutivesessions at intraday highs of $93.18 and $93.20 on Sept. 24 and25.

U.S. gasoline and heating oil futures, which have beensupported by low inventory levels and refinery disruptions thisweek, posted small gains despite the losses in crude.


U.S. crude stocks rose 1.6 million barrels last week, theindustry group American Petroleum Institute said on Wednesday,more than the consensus of analyst expectations.

Gasoline stocks rose 2.5 million barrels but distillateinventories fell a whopping 6.2 million barrels, API said.

Distillate stockpiles were expected to be down 500,000barrels in the week to Oct. 5, a Reuters survey of analystsshowed.

Expectations were for an 800,000-barrel build in crudeinventories and no change in gasoline stocks.

The government report from the EIA will follow at 11 a.m.EDT (1500 GMT) on Thursday.

Brent's premium to U.S. crude

seesawed, thenpushed higher to end at $23.08 a barrel based on settlements,after reaching $23.39, the widest spread since Oct. 2011.

"Some temporary factors are keeping it wide, including alower-than-expected return of North Sea production and theongoing geopolitical premiums on the Brent side," said VikasDwivedi, global oil and gas economist for Macquarie Group inHouston, referring to the delays in Forties cargo loading in theNorth Sea.


Graphic on WTI-Brent spread:

Graphic of 24-hr chart Brent analysis:



Markets are closely monitoring the developments in Turkeyand Syria. Turkey's military chief of staff said on Wednesdayhis troops would respond with greater force if bombardments fromSyria kept hitting Turkish territory.

"It's not that Syria and Turkey are significant oilexporters but Iraqi crude from the northern part of Iraq(Kirkuk) flows via pipeline through Turkey to Ceyhan," saidDominick Chirichella, an energy analyst at New York's EnergyManagement Institute.

Gloomy economic expectations have tempered oil prices thisyear against geopolitical turmoil, including the risk tosupplies from Iran due to sanctions from the West.

Oil prices came under early pressure from continuing worriesabout economic growth after the International Monetary Fund saidrisks to global financial stability had risen in the past sixmonths, leaving confidence "very fragile".

No. 2 oil consumer China's annual economic growth isexpected to have slowed for a seventh straight quarter in theJuly-September period to its weakest level since the depths ofthe global financial crisis, a Reuters poll showed.

(Additional reporting by Matthew Robinson in New York, AliceBaghdjian in London and Florance Tan in Singapore; Editing byDale Hudson, Sofina Mirza-Reid and Bob Burgdorfer)

((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(ReutersMessaging: robert.gibbons.reuters.com@reuters.net))

Keywords: MARKETS OIL/