Oil prices fall as US refinery maintenance nears

By Barani Krishnan

NEW YORK, March 10 (Reuters) -- Oil prices fell on Thursday, with US crude retreating from three-month highs as refinery maintenance threatened to raise record inventories of crude and sources said an OPEC production freeze meeting was unlikely without Iran's participation.

An initial rally in the dollar after the European Central Bank cut its key lending rate to zero also pressured oil, although crude prices recovered from their lows as the euro rebounded on ECB comments that more cuts were unlikely.

Global oil benchmark Brent was down 85 cents at $40.22/bbl by 10:44 a.m. EST (1544 GMT), after a session low at $39.81.

US crude slid 57 cents to $37.72/bbl, having recovered from an intraday low of $37.36.

Oil rallied as much as 5% on Wednesday, with US crude hitting three-month highs of $38.51/bbl, as a big gasoline inventory drawdown amid improving demand for energy overshadowed record high crude stockpiles.

But some analysts said on Thursday last week's gasoline stock build, which was triple expectations, could be partly due to the market transitioning from winter-grade to summer-grade motor fuel. They also said the US refinery maintenance season could push crude stockpiles to even bigger highs.

"It looks like the market is still ignoring crude inventories," said Scott Shelton, energy broker at ICAP in Durham, North Carolina.

A meeting between oil producers to discuss a global pact on freezing production is unlikely to take place in Russia on March 20, sources familiar with the matter say, as OPEC member Iran is yet to say whether it would participate in such a deal.

"The idea that meeting may not happen at all is definitely weighing on the market," said Tariq Zahir, who mostly trades in US crude oil spreads at Tyche Capital Advisors in New York.