* Oil drops toward $117 after U.S. inventory data
* Data shows big increases in crude and distillate stocks
* White House says punitive measures needed against Iran
(Updates prices, details, changes dateline from LONDON)
NEW YORK, Aug 6 (Reuters) - Oil dropped to a three-month low
under $118 a barrel on Wednesday as rising U.S. crude
inventories heightened concerns of a demand slowdown in the
world's top consumer.
U.S. light crude <CLc1> traded down $1.69 at $117.48 a
barrel by 12:41 p.m. EDT (1641 GMT) after hitting $117.11, the
lowest level since early May and $30 off the record $147.27 a
barrel struck on July 11.
London Brent crude <LCOU8> fell $1.03 to $116.67 a barrel.
Crude oil stocks rose by 1.7 million barrels in the week to
Aug. 1, according to data from the U.S. Energy Information
Administration (EIA), well above analysts' forecasts for a
300,000-barrel build. []
Stocks of distillate fuels, including heating oil and
diesel, rose by 2.8 million barrels, also above forecasts, while
gasoline inventories fell by a steep 4.4 million barrels against
forecasts of a 1.2 million barrels drop.
"The EIA data showing big increase in crude stocks are
bearish, but the gasoline numbers showing a much larger than
expected draw is certainly bullish," said Phil Flynn, analyst
for Alaron Trading in Chicago. "But data also show that gasoline
supply was down due to a decline in imports."
U.S. energy stockpiles have been climbing in recent weeks
amid mounting evidence that surging pump prices and an economic
slowdown are hitting fuel consumption.
Adding to weakness, Tropical Storm Edouard, the fifth named
storm of the 2008 Atlantic hurricane season, hit the Texas coast
without causing any major disruptions to U.S. energy operations.
[]
Oil companies were returning workers to offshore rigs in the
Gulf of Mexico and resuming normal operations at refineries
along the coast.
"The next support area is $117. If we break through $117 we
are probably not going to be able to create any upward momentum
in the market," said Rob Kurzatkowski, futures analyst at
optionsXpress in Chicago.
Crude's losses were tempered somewhat by news of an
explosion on the Baku-Tbilisi-Ceyhan oil pipeline in eastern
Turkey late on Tuesday that halted oil flows along the key
pipeline.
Nigerian supply concerns amid ongoing disruptions due to
militant attacks and the threat of disruptions from Iran should
its standoff with the West worsen have also been in focus,
dealers said.
Iran says it is seeking to master nuclear technology only to
generate electricity and has repeatedly refused to halt its
atomic work, prompting the U.N. Security Council to impose three
rounds of penalties on Tehran since 2006.
The U.S. State Department said major powers had agreed on
Wednesday to consider more U.N. sanctions against Iran after
Tehran gave no concrete reply to their demand that it freeze its
nuclear activities. []
(Additional reporting by Matthew Robinson in New York, Seng Li
Peng in Singapore and Barbara Lewis in London, editing by
Matthew Lewis)
