Oil Slides On US Refinery Maintenance, OPEC Meeting Doubts
NEW YORK, March 10 (Reuters) - Oil prices fell on Thursday, with U.S. crude retreating from three-month highs as refinery maintenance looked set to boost record domestic crude stockpiles, while an OPEC meeting aimed at freezing output appeared unlikely without Iran's participation.
Crude prices drew support as the dollar weakened versus the euro. Trading was also volatile toward settlement on buying by funds aiming to keep prices at or near $40 a barrel, market participants said.
Global oil benchmark Brent settled down $1.02, or 2.5 percent, at $40.05 a barrel, after hitting a session low at $39.63.
U.S. crude fell 45 cents to finish at $37.84, having recovered from an intraday low of $37.21.
On Wednesday, oil rallied as much as 5 percent, with U.S. crude hitting three-month highs of $38.51 a barrel as a big gasoline inventory drawdown overshadowed record high crude stockpiles.
On Thursday, some analysts said the gasoline draw, which was triple expectations, could be partly due to the market transitioning from winter-grade to summer-grade motor fuel. They also said the U.S. refinery maintenance season could push crude stockpiles even higher.
Some said that despite the big U.S. draw, there was ample gasoline on both sides of the Atlantic, which could undercut a sustained recovery in crude prices.
U.S. gasoline futures fell 2 percent on Thursday, after a 6 percent rally the previous session.
"The gasoline drawdown is great but we still have record high crude stocks. The question is whether we are just going to depend on falling U.S. production to bring that down, or OPEC will also get its act together on an output freeze," said David Thompson at Washington-based commodities brokerage Powerhouse.
A meeting between oil producers to discuss a global pact on freezing production was unlikely to take place in Russia on March 20, so long as Iran refused to cooperate, sources familiar with the matter said.
Iranian President Hassan Rouhani's Chief of Staff said Tehran must regain its share of the global oil market before participating in any deal restricting supply.
"The idea that meeting may not happen at all is definitely weighing on the market," said Tariq Zahir, who mostly trades U.S. crude oil spreads for Tyche Capital Advisors in New York.
Crude prices came off their lows after buyers using the euro benefited from its rally. The single currency surged when the European Central Bank ruled out further rate cuts after bringing key lending rates to zero.
Buying from funds believed to be running algorithmic trading models, which can execute massive orders at a time, also helped.
"The funds have turned bullish and the market seems determined to stay at or around $40," said Pete Donovan, broker at Liquidity Energy in New York.
(Additional reporting by Sarah McFarlane in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and David Gregorio)
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