(Recasts throughout, adds U.S. inventory data, updates prices)
By Alex Lawler and Santosh Menon
LONDON, July 23 (Reuters) - Oil fell over on Wednesday, for
a second straight session, as a U.S. government report showed
larger-than-expected increases in inventories of gasoline and
distillates.
The U.S. government's Energy Information Administration
(EIA) said gasoline stocks rose by 2.9 million barrels last week
against forecasts of a 300,000 barrels build.
Stocks of distillates, which include diesel, rose to 2.4
million barrels when they had been forecast to rise by 2.3
million barrels.
"This looks like another pretty bearish report with a large
build in distillates and gasoline ... People are not driving
as much, it looks like consumers are slowing demand," said Rob
Kurzatkowski, futures analyst at OptionsXpress in Chicago.
U.S. crude <CLc1> for September fell $1.78 at $126.64 by
1457 GMT, off lows of $125.31, the lowest since June 5.
Brent crude <LCOc1> was $1.95 lower at $127.60.
The build of refined products stocks in the United States,
the world's biggest energy consumer, overshadowed a larger than
expected decline in crude oil stocks, which fell by 1.6 million
barrels against forecasts of a 1.3 million barrel draw.
Earlier in the session, oil fell as concern eased that
Hurricane Dolly would hit Gulf of Mexico crude supply.
The drop also coincided with a firmer dollar, which may have
reduced the appeal of commodities to some investors, analysts
said. The dollar hit a two-week high against the euro on
Wednesday. []
Analysts who chart past price movements to predict future
direction said the market could head lower for now, given that
the next area of support is around $120 to $122 a barrel for
U.S. crude.
"In addition to Dolly's likely fade into oblivion, we
suspect that crude's technicals are not helping matters much
either," analysts at MF Global said in a report.
Even after its pullback from the July 11 record high of
$147.27, oil has rallied almost 30 percent in 2008 and is up
from $20 in early 2002, driven by demand from fast-growing
economies like China.
Hurricane Dolly was still expected to come ashore well away
from the key offshore platforms, even after it was upgraded to
the Atlantic season's second hurricane late on Tuesday.
Oil companies working in the U.S. Gulf of Mexico shut 5
percent of oil and natural gas output by Tuesday but those
outages were expected to be short-lived. []
(Additional reporting by Annika Breidthardt, editing by
William Hardy)
