* Oil rally pauses after 6 days of gains for Brent
* Commodity price rally unsustainable, Goldman says
* U.S. crude stockpiles seen hitting record highs again
* North Sea output seen hitting 4-year peak by April
* Kuwait pumps 3 mlb bpd, won't join output freeze without
Iran
(New throughout, updates prices, market activity and comments
to U.S. session; changes byline and dateline, previous LONDON)
By Barani Krishnan
NEW YORK, March 8 (Reuters) - Oil prices fell about 3
percent on Tuesday, retreating after six days of gains for
benchmark Brent crude, as Goldman Sachs (NYSE:GS) suggested the rally was
unsustainable and analysts expected data likely to show another
record high in U.S. stockpiles.
Differing views on a plan to limit oil output also put the
market on the defensive. Kuwait, producing 3 million barrels per
day (bpd), said it will freeze output only if all major
producers participate, including Iran, which has balked at the
plan.
"The comments out of Kuwait have encouraged the sell-off and
it appears likely that a focus on weekly oil inventories will
encourage prices lower," said Matt Smith, director of commodity
research at New York-based Clipper Data.
Brent LOCc1 was down $1, or 2.5 percent, at $39.84 a barrel
by 12:42 p.m. EST (1742 GMT). During the session it hit a 2016
high of $41.48, which was up more than 50 percent from a 12-year
lows of $27.10 struck less than two months ago.
U.S. crude slipped $1.23, or 3.3 percent, to $36.67 a
barrel, rallying earlier to a three-month high of $38.39.
Goldman Sachs said rising oil prices "simply are not
sustainable in the current environment".
The energy market "needs lower prices" to keep U.S. shale
producers from ramping up output, Goldman said in a report.
Otherwise, "an oil price rally will prove self-defeating, as it
did last spring."
A Reuters poll of oil analysts forecast that U.S. crude
stocks likely rose 3.6 million barrels last week, pushing total
inventories to a record high for a fourth week EIA/S .
The American Petroleum Institute will release more
preliminary stockpiles data at 4:30 p.m. EST (2130 GMT), before
official numbers on Wednesday from the U.S. government's Energy
Information Administration (EIA).
A global supply glut in oil has brought prices down from
highs above $100 in mid-2014.
North Sea crude supply should hit a four-year peak in April,
holding above 2 million bpd for an eighth consecutive month,
monthly loading programmes show.
In a development that could support a further rally, the EIA
said it expected U.S. production for this year to drop 760,000
bpd versus 740,000 bpd previously. It also cut its 2016 demand
growth forecast by 80,000 bpd versus 110,000 barrels previously.
While China's crude imports jumped 19 percent between
January and February to 31.80 million tonnes, Brent's rally to
$40 could slow oil purchases in the second quarter, trade
sources said. China's economic health also remained in question,
with total exports falling 25 percent in February.