Oil pulled lower by gasoline sell-off

By Richard Valdmanis

NEW YORK (Reuters) - Oil prices fell a dollar on Friday, pulled lower by a sell-off in the gasoline market as dealers bet there would ample fuel supply in the United States to meet demand from summer vacationers.

U.S. crude fell $1.00 to $70.37 a barrel by 12:35 p.m. EDT, led by a nearly 7-cent per gallon drop in gasoline futures. Brent crude fell 97 cents to $70.09 a barrel.

"Gasoline is under siege here, with the supply build after production rose last week," said Andy Lebow, broker at MF Global in New York.

U.S. gasoline supplies rose unexpectedly last week as refiners boosted output to prepare for an expected seasonal uptick in demand, according to government data issued Wednesday.

Experts have been mixed on how strong consumption for the motor fuel will be this summer as the effects of the recession counter-balance relatively low prices at the pumps.

The U.S. Transportation Department said on Friday Americans drove more miles in April than they did a year earlier, marking the first monthly rise in U.S. highway travel in more than a year.

Oil prices had been in positive territory earlier in the day as rebel attacks in Nigeria hit output from the OPEC-member country and economic optimism propelled equities markets higher.

Nigeria's main militant group MEND said it had attacked a pipeline operated by Italy's Agip, close on the heels of previous attacks on facilities operated by Royal Dutch Shell and Chevron. Together, the attacks have cut at least 133,000 barrels of daily output.