Oil falls again despite Caucasus supply worries

Oil fell towards $115 a barrel yesterday after a $3 rise the previous session following a larger-than-expected drop in US crude and gasoline inventories.

Concerns about the security of energy transit routes through the Caucasus have provided some support, although analysts said the mood is still predominantly bearish.

US data on Wednesday showed a fall in crude and gasoline inventories after a number of precautionary refinery closures in response to Tropical Storm Edouard. US crude was down 75 cents at $115.25 by 1305 GMT, off a high of $117.42 hit earlier in the session. London Brent fell 44 cents to $113.03.

"We've corrected quite a bit on oil, despite a lot of bullish news, the sentiment has been bearish," said Harry Tchiliguirian, BNP Paribas senior oil analyst.

Oil prices rose on Wednesday after US Government data showed crude stocks in the world's top energy consumer dropped by 400,000 barrels last week, while gasoline inventories fell by 6.4 million barrels.

Disruptions to energy exports from the Caspian region have helped to underpin prices as Western powers try to shore up support for a shaky ceasefire between Russian and Georgian troops around the breakaway region of South Ossetia.

British oil group BP resumed gas exports from Azerbaijan to Turkey via Georgia, but the oil pipeline to the Black Sea port of Supsa remained closed.

BP had shut the Baku-Supsa oil pipeline and the gas pipeline to Turkey early on Tuesday because of the military conflict.

A third BP oil pipeline running through Georgia, the Baku-Tblisi-Ceyhan pipeline, was also shut after it was damaged by an explosion last week. Repairs have begun on the pipeline, but it is not known when it will reopen.