Brent slips towards $102 on US stockbuild; dollar supports

By Manash Goswami

SINGAPORE (Reuters) - Brent oil slipped towards $102 a barrel on Friday as a surprise jump in U.S. crude stockpiles fuelled worries about demand from the top consumer, but a softer dollar amid hopes the Federal Reserve would maintain its stimulus checked losses.

The U.S. economy grew slightly less-than-expected in the first quarter and initial jobless claims also pointed to a fragile economy still requiring support from monetary policy. This dragged down the dollar and boosted riskier assets.

But oil gave up early gains as the inventory buildup and slowing demand in most top users weighed on sentiment.

Brent oil traded 13 cents lower at $102.06 a barrel by 0646 GMT, extending its losses into a third straight session. U.S. oil fell 12 cents to $93.49.

Brent is poised to slip for a second straight week, ending May almost unchanged after three straight months of declines.

"Given where the inventories are, given where the economies are, oil is very expensive at these levels," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.

But a soft dollar, which makes commodities priced in the greenback cheaper for holders of other currencies, kept a floor under oil prices.

The U.S. dollar hovered near a three-week low against the euro after the weak data, which the market hopes will dissuade the Fed from trimming its monetary stimulus in the immediate future.

STOCKPILES

U.S. crude stockpiles rose 3 million barrels, the Energy Information Administration said, compared with an average forecast for a 400,000 barrels fall for the week ended May 24.

Gasoline stocks fell, but the decline wasn't enough to offset the build-up in inventory in recent weeks.

"U.S. crude stocks built substantially and increases were also seen at Cushing," analysts at BNP Paribas said in a note.

"In the case of gasoline, while the draw was larger-than-expected, the latest weekly stock change only partially reverses a large build of a week earlier and gasoline stocks remain ample at the top of the recent five-year range."

Growing concerns that China, the world's second-biggest oil consumer and economy, is losing steam are also weighing on oil prices. The country's PMI likely retreated to 50.1 in May from April's 50.6, a Reuters poll showed.

Both Brent and the U.S. benchmark are expected to revisit their Thursday lows of $101.08 and $91.65, respectively, according to Reuters technical analyst Wang Tao.

Investors are also awaiting the outcome of an OPEC meeting due later today. The Organization of the Petroleum Exporting Countries is expected to stick with its 30 million barrel a day (bpd) output target for 2013.

(Editing by Himani Sarkar and Richard Pullin)