Oil slips below $69 on US product build, dollar

NEW YORK (Reuters) - Oil prices fell on Wednesday as the stronger dollar and rising U.S. product stocks outweighed supply concerns from Nigeria.

U.S. gasoline stocks rose by 3.9 million barrels in the week to June 19, well above analysts' forecasts, as refiners cranked up output in the midst of the summer driving season.

Distillate stocks hit 10-year highs, while crude stocks showed a steep drop.

U.S. crude traded down 45 cents to $68.79 per barrel at 1:14 p.m. EDT (1714 GMT), reversing earlier gains. London Brent crude fell 41 cents to $68.39 a barrel.

"Crude futures are back down on the weight of a stronger dollar," said Mark Waggoner, Excel Futures President from Huntington Beach, California. "The EIA inventory report also showed large increases in gasoline and distillate stocks and that's dragging down crude."

The U.S. dollar rose broadly and jumped against the Swiss franc as traders reported the Swiss National Bank was intervening in the market by selling the currency for dollars and euros. The rising dollar can pressure commodities denominated in the greenback.

Optimism over a potential economic recovery boosting flagging fuel demand has lifted oil prices from below $40 a barrel.

However, crude imports by No. 3 consumer Japan fell by 18.8 percent in May against last year, according to government data.

EIA data showed total U.S. demand down 6.6 percent in the four weeks to June 19, compared with year-ago levels.