* Brent premium to WTI widest since mid-May on inventories
* Explosion at Mexico refinery supports fuel prices
* Technicals show oil pinned in narrow range
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* Coming Up: API U.S. oil inventories; 2030 GMT
(Updates storm status, prices)
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 Asian equities declined on
investor attempts to reduce risk exposure.
The euro struggled near record lows against the Swiss
franc, while Japan's Nikkei average fell more than 2 percent on
renewed concerns about European banks and the global economy,
which pulled stock markets down from one-month highs on
Tuesday.
U.S. crude for October <CLc1> fell 22 cents to $73.87 a
barrel by 0645 GMT. The front-month contract pared losses on
Tuesday after an explosion at a refinery in northern Mexico
raised speculation that fuel imports 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 equities," 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 since
weekly records began in 1990.
CUSHING GLUT
Crude stocks at the land-locked benchmark pricing point in
Cushing, Oklahoma, have remained high, depressing the value of
U.S. crude relative to European Brent <LCOc1>, which was
trading about $3.70 higher than the U.S. benchmark West Texas
Intermediate (WTI) on Wednesday, shedding 15 cents to $77.59.
For a graphic on Brent's premium to WTI, click:
http://graphics.thomsonreuters.com/AS/0810/ABE_20100809105935.jp
g Brent's premium to WTI was the biggest since mid-May.
Such a reversal in the usual price relationship between the two
grades is known as WTI dislocation, a market condition in which
the U.S. benchmark gets disconnected from seabourne 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.
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 weeks last week, down by a moderate 600,000
barrels, as refineries reduced imports in preparation for
stormy weather, a Reuters poll showed on Tuesday.
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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.
A big low-pressure area over the Cape Verde Islands had a
medium chance, or 50 percent, of becoming a tropical cyclone in
the next 48 hours, according to the NHC.
It was too early to tell whether any of these systems might
move into the Gulf and disrupt offshore oil and gas production.
A compressor failure at Mexico's Cadereyta refinery's gas
oil hydrotreater triggered the explosion and a fire on Monday,
forcing Pemex to shut it down, together with a coker.
Pemex did not say how long the two units, which support
gasoline and diesel production, would be out of service, but in
the meantime it said crude oil processing has been reduced by
15,000 bpd to 200,000 bpd. []
(Editing by Manash Goswami)
