UPDATE 3-Oil holds above $118, calm over N.Korea nuclear test

Last Updated: Tue, Feb 12, 2013 10:00 hrs

* North Korea confirms it carried out nuclear test

* Iran converts some enriched uranium into reactor fuel

* U.S. crude stocks seen up 2.9 mln bbls -Reuters poll (Updates previous TOKYO)

By Peg Mackey

LONDON, Feb 12 (Reuters) - Oil held above $118 a barrel on Tuesday, with investors largely unfazed by North Korea's nuclear test and awaiting weekly data on oil stockpiles in top consumer, the United States.

North Korea confirmed on Tuesday it had successfully conducted a nuclear test, saying it used a miniaturized device that had a greater explosive force than previous tests.

Brent crude, which expires on Wednesday, was trading 7 cents lower at $118.06 a barrel by 0919 GMT, after settling down 77 cents on Monday.

U.S. crude was down 29 cents at $96.74 a barrel.

"The test is a threat but it is not a realistic one," said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo.

"Though the threat will be there for long, I do not think this would immediately lead to a skirmish. It's definitely something to worry about, but the impact (on the oil market) is neutral."

The U.N. Security Council will hold an emergency meeting to discuss North Korea's test at 9 a.m. EST (1400 GMT) on Tuesday.

Tensions in the Middle East remain high over Iran's nuclear programme. Iran is converting some of its higher-grade enriched uranium into reactor fuel, the Islamic republic's foreign ministry spokesman said.

Israeli Prime Minister Benjamin Netanyahu said on Monday that new centrifuges Iran was installing for its uranium enrichment programme could cut by a third the time needed to create a nuclear bomb. Tehran says the nuclear programme for peaceful energy purposes


Oil markets were also focusing on weekly inventory data in top consumer the United States. U.S. commercial crude oil stockpiles are expected to have increased 2.9 million barrels last week, a preliminary Reuters poll of four analysts showed on Monday.

Distillate stocks, which include heating oil and diesel fuel, were projected to be down 800,000 barrels on average, while gasoline inventories were seen unchanged.

Industry group American Petroleum Institute releases its weekly report at 1630 EST (2130 GMT). The U.S. government's Energy Information Administration is set to follow with its own figures on Wednesday.

Developments in the euro zone threaten to weigh further on equities and global oil demand, though recent data has shown stronger international trade in China, which helped Brent touch a nine-month high above $119 a barrel on Friday.

The oil market also looked ahead to the finance ministers from the Group of 20 nations scheduled to meet in Moscow on Friday and Saturday.

The Group of Seven nations are considering a statement this week reaffirming their commitment to "market-determined" exchange rates in response to heating rhetoric about a currency war, G20 officials said on Monday. (Additional reporting by Osamu Tsukimori in Tokyo; Editing by Alison Birrane)

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