* Oil drops below $71 a barrel after EIA data
* U.S. products builds weigh on crude prices []
* Crude stocks at NYMEX delivery point in Cushing up
(Updates prices)
By Rebekah Kebede
NEW YORK, Dec 9 (Reuters) - Oil dropped more than 3 percent
to $70 a barrel on Wednesday after government data showed
larger-than-expected builds in U.S. refined products due to
weak demand in the world's top consumer.
U.S. crude <CLc1> for January delivery dropped $2.36 to
$70.26 a barrel by 1:40 p.m. EST (1840).
London Brent crude <LCOc1> losses were in the lead on
Wednesday, dropping $3.09 to $72.10.
Distillate inventories, which include heating oil and
diesel, had a surprise build of 1.6 million barrels, to 167.3
million barrels, contrary to forecasts for a fall of 600,000
barrels, according to the U.S. Energy Information
Administration.
Gasoline stockpiles were up 2.2 million barrels at 216.3
million barrels, above analysts' projections of a
1.5-million-barrel build.
"The size of the product build was surprising and somewhat
bearish and that is weighing on crude right now," said Stephen
Schork, editor of the Schork Report in Villanova,
Pennsylvania.
Meanwhile, U.S. crude stockpiles had a surprise draw of 3.8
million barrels, to 336.1 million barrels, against expectations
for a 600,000-barrel build.
Further pressure came from rising crude inventories at
Cushing, Oklahoma, the delivery point for NYMEX crude oil
futures. Inventories there were up 2.5 million barrels, at 33.4
million barrels last week, according to the EIA report.
Rising stocks at Cushing over the last month have been
helping to deepen the discount for prompt oil below forward
prices, in what traders call a contango.
RETURN TO FUNDAMENTALS?
Crude losses over the last five days had been partly driven
by a recovery in the dollar. The dollar <=USD> index fell
against major currencies <.DXY> on Tuesday, however.
"You're seeing the selling snowball and without the support
of strong equity prices and a weak dollar ... the fundamental
picture is regaining control of the market," said Gene
McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
Oil is priced in dollars so a rise in the currency makes
fuel more expensive to most consumers outside the United
States.
For a graphic showing the oil and dollar, see:
http://graphics.thomsonreuters.com/129/CMD_OIL$CR1209.gif
The oil market received some support on Wednesday from
comments by two oil ministers, who said the Organization of the
Petroleum Exporting Countries should not raise its oil output
targets when it meets later this month. []
The group, which pumps more than a third of the world's
oil, meets in the Angolan capital of Luanda on Dec. 22 and many
OPEC ministers see the current oil price range of $70-$80 as
fair.
"The market is reasonably stable, so no, I don't think so,"
Nigeria's minister of state for petroleum, Odein Ajumogobia,
said on the sidelines of a meeting of gas exporting nations
when asked if OPEC needed to pump more oil.
(Additional reporting by Christopher Johnson in London;
Editing by Keiron Henderson and Christian Wiessner)
