UPDATE 9-Oil slides 2% as glut forecast, China virus overshadow Libya disruption

* IEA's Birol expects 1 mln bpd surplus in first half of
2020
* Coronavirus could hit oil demand -Goldman Sachs
* U.S. crude stocks seen lower, gasoline builds for 11th
wk-poll
* U.S. crude stockpiles rise unexpectedly last week -API
* Graphic on U.S. petroleum inventories: https://tmsnrt.rs/35DZduT

(Adds API data, price reaction)
By Devika Krishna Kumar
NEW YORK, Jan 22 (Reuters) - Oil prices fell more than 2% on
Wednesday as a market surplus forecast by the International
Energy Agency (IEA) and demand worries amid the outbreak of a
virus in China outweighed concern over disruptions to Libya's
crude output.
Brent crude LCOc1 ended the session down $1.38, or 2.1%,
at $63.21 while West Texas Intermediate CLc1 fell $1.64, or
2.8%, to settle at $56.74.
Prices extended losses in post-settlement trade, with WTI
dropping by more than $2, after data from the American Petroleum
Institute showed U.S. crude inventories rose 1.6 million barrels
last week, compared with analysts' expectations for 1
million-barrel draw. {EIA/S] API/S
U.S. gasoline stocks built for an 11th week, rising 4.5
million barrels, the API said, much more than forecasts for a
3.1 million-barrel gain.
Official U.S. government data is due at 11 a.m. ET (1600
GMT) on Thursday, delayed a day in observance of Monday's Martin
Luther King Jr. Day holiday.
The head of the IEA, Fatih Birol, said he expects the market
to be in surplus by 1 million barrels per day (bpd) in the first
half of this year. "Oil prices remain heavy on oversupply concerns and after
the Saudi Energy Minister Price Abdulaziz did not offer any
hints of optimism that the OPEC+ production cuts would be
extended beyond March," said Edward Moya, senior market analyst
at OANDA in New York.
"China's coronavirus will likely see travel restrictions
that could end up hurting demand for crude during a peak travel
time in China."
Markets are also focusing on the emergence from China of a
new coronavirus just ahead of the Lunar New Year holidays this
weekend and the possible impact a pandemic might have on global
economic growth. MKTS/GLOB
Deaths from the new flu-like virus in China have risen to 17
with more than 540 cases confirmed, with cases now detected as
far away as the United States. Should the virus develop dramatically and hit travel and
growth, demand for oil could fall by 260,000 bpd, Goldman Sachs
said in a note.
"Demand concerns over a potential epidemic will counter
concerns around supply disruptions in Libya, Iran and Iraq,
driving spot price volatility in coming weeks," Goldman said,
though the "impact on oil fundamentals remains limited so far".
Oil prices have been marginally supported after Libya's
National Oil Corp on Monday declared force majeure on the
loading of oil from two major oilfields after the latest
development in a long-running military conflict. Unless oil facilities return to operation quickly, OPEC
member Libya's crude output will be reduced to about 72,000 bpd
from about 1.2 million bpd.
"The Libyan pipeline blockade continued to have a muted
impact on sentiment ... There is a consensus that the disruption
will prove short-lived," said Stephen Brennock of oil broker
PVM.
Meanwhile, Kazakhstan has suspended its oil exports to China
after contamination was found in crude supplied by a Kazakh
producer less than a year after a 'dirty oil' crisis broke in
neighboring Russia. Overall though, global supplies are likely to continue to
rise, with U.S. crude production in large shale deposits
expected to rise to record highs in February, though the pace of
increase is likely to be the lowest in about year, the U.S.
Energy Information Administration (EIA) said on Tuesday.
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CHART: Brent oil may retest resistance zone of $65.79-$66.03
U.S. petroleum inventories https://tmsnrt.rs/35Hre4S
CHART: U.S. oil may retest resistance at $59.50 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>