* Market focus on high inventories, economic uncertainty
* Explosion at Mexico refinery supports fuel prices
* Coming Up: API U.S. oil inventories; 2030 GMT
By Alejandro Barbajosa
SINGAPORE, Sept 8 (Reuters) - Oil fell for a third straight
session on Wednesday, with the U.S. benchmark depressed by
brimming petroleum stockpiles, as the dollar jumped and Asian
equities declined on investor attempts to reduce risk exposure.
The dollar gained almost 1 percent against a basket of
currencies while Japan's Nikkei average fell 2 percent on
renewed concerns about European banks and the global economy,
which pulled global stock markets down from one-month highs on
Tuesday.
The euro was on the defensive as the latest scare over the
euro zone banking system slapped it to lifetime lows against
the Swiss franc and Australian dollar. []
U.S. crude for October <CLc1> fell 32 cents to $73.77 a
barrel by 0013 GMT. The front-month contract pared losses on
Tuesday after an explosion at a refinery in northern Mexico
raised speculation that fuel import requirements would increase
from the Latin American country, the biggest buyer of U.S. oil
products. It had earlier touched a one-week trough below $73.
"As soon as there is some fear of risk of a double-dip,
people pull out of commodities and equites and go into the
dollar," said Tony Nunan, a risk manager with Tokyo-based
Mitsubishi Corp.
"People feel that oil demand will pick up as the economy
picks up, but they have been braving that for six months
thinking that inventory would eventually draw down."
Total U.S. petroleum stockpiles are at their highest level
since weekly records began in 1990.
CUSHING GLUT
Crude stocks at the land-locked benchmark pricing point in
Cushing, Oklahoma, have remained at high levels, depressing the
value of U.S. crude relative to European Brent <LCOc1>, which
was trading about $3.60 higher than U.S. benchmark West Texas
Intermediate (WTI) on Wednesday, shedding 42 cents to $77.34.
Brent's premium to WTI was the biggest since mid-May. The
appearance of such an unusually wide spread is known among oil
analysts as WTI dislocation, a market condition where the U.S.
benchmark becomes disconnected from seabourne oil markets,
where prices are largely determined by global fundamentals.
"The problem with the U.S. is their visibly high
inventories, while waterbourne Brent has a ready outlet in
Asia," Nunan said.
"It does compete with Persian Gulf crude, but it is still a
lot easier to dissipate excess supply" than for WTI.
For a graphic on Brent's premium to WTI, click:
http://graphics.thomsonreuters.com/AS/0810/ABE_20100809105935.jp
g Analysts including JP Morgan's Lawrence Eagles expect
Cushing supplies will rise in coming weeks as U.S. refineries
enter autumn maintenance, reducing their demand for crude.
Summer maintenance at North Sea fields and a strong Urals
crude market have this time also contributed to Brent's
widening premium.
Still, overall U.S. crude inventories probably fell for the
first time in three week last week, down by a moderate 600,000
barrels, as refineries reduced imports in preparation for
stormy weather, a Reuters poll showed on Tuesday.
[]
Weekly industry and government statistics on inventories
will be delayed by one day this week, to Wednesday for the
American Petroleum Institute and Thursday for the Energy
Information Administration.
The poll also showed forecasts for a 700,000 barrel
increase in stockpiles of distillates, including heating oil
and diesel fuel, and a 900,000 barrel decline in gasoline
supplies.
The U.S. National Hurricane Center was monitoring three
tropical systems in the Atlantic basin, one approaching the
Caribbean Sea and two near Africa's west coast.
The NHC said cloudiness and showers over the Leeward
Islands and northeastern Caribbean Sea were associated with
Gaston's remnants, but the system had just a 20 percent chance
to become a tropical cyclone again during the next 48 hours.
It was too early to tell whether any of the systems might
move into the Gulf and disrupt offshore energy production.
(Editing by Manash Goswami)
