UPDATE 2-Oil falls as U.S. petroleum stocks head for record

                                
   * U.S. crude stocks jump surprise at 5.9 million barrels
-API
                                
 * Technicals target $77.50 on bullish reversal [nSGE67H018]
                                
 * Brent premium to WTI biggest in 2 months on Cushing
stocks
                                
 * Coming Up: U.S. EIA weekly inventory report; 1430 GMT
 (Updates with accelerating price drop)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Aug 18 (Reuters) - Oil prices fell on Wednesday
after an industry report signalled petroleum inventories in top
consumer the United States were headed for a record, following
an unexpected sharp increase in crude stocks last week.
                                
 U.S. crude for September delivery <CLc1> fell 0.7 percent,
or 55 cents, to $75.22 a barrel by 0715 GMT. ICE Brent for
October <LCOc1> fell 58 cents to $76.35, after flipping into a
premium to the U.S. benchmark on Tuesday.
                                
 For a graphic of WTI's relation to Brent and Cushing
stocks:
                                
 http://link.reuters.com/sap65n
                                
 Prices are now centred near the mid-point of this year's
$64.24-$87.15 trading range, as recovering energy demand has
been insufficient to drain ample supplies, leading to an
unseasonal raft of seven consecutive weeks of gains in U.S.
gasoline stockpiles and eleven in distillate inventories,
including diesel.
                                
 "It looks like the oil product market is very comfortably
supplied and that demand conditions remain lacklustre," said
Stefan Graber, a commodities analyst with Credit Suisse in
Singapore.
                                
 "It will probably take a few weeks until we see decisive
improvements."
                                
 The American Petroleum Institute late on Tuesday said U.S.
crude stockpiles rose by almost 5.9 million barrels last week,
compared with analysts' expectations for a 1-million-barrel
drop. [API/S]
                                
 ABUNDANT GASOLINE
                                
 Gasoline stocks rose 2 million barrels, the API said,
compared with forecasts for a 100,000 barrel decline, while
distillates including diesel rose 2.1 million barrels, topping
predictions for a 1.5 million barrel gain in a Reuters survey.
                                
 Supplies of gasoline normally fall over the summer as
consumption peaks in the Northern Hemisphere. The unusual
supply build-up sent futures prices of gasoline component RBOB
on the New York Mercantile Exchange to their lowest in almost
three months earlier this week. <RBc1>
                                
 If the API data is confirmed on Wednesday by weekly
government statistics on inventories and demand from the U.S.
Energy Information Administration, it would send the country's
combined crude and product inventories to a record high.
                                
 Last week's EIA data showed combined crude and product
stockpiles at 1.125 billion barrels -- 3.5 million higher than
at the same time last year and 2.1 million below the record
high set back in 1990, when the U.S. government started
publishing the data.
                                
 An unusual premium of front-month Brent over U.S. benchmark
West Texas Intermediate (WTI) crude reached its widest level in
two months on Tuesday on speculation that a glut at the
Cushing, Oklahoma pricing point for WTI was expanding. It
remained steady at slightly more than $1 a barrel on Wednesday.
                                
 Crude supplies at Cushing stood at 37.7 million barrels in
the week through Aug. 6, just shy of a record 37.9 million
barrels in mid-May, according to the EIA.
                                
 OPEC'S SWEET SPOT
                                
 Oil prices have mostly hovered around the sweet spot for
the Organization of the Petroleum Exporting Countries (OPEC) in
the $70-$80 range this year, after the group relaxed compliance
with 2008 production cuts.
                                
 But the crude market has been rattled by the influence of
currency and stock market fluctuations on an intraday basis as
investors reduced or increased risk exposure, especially at the
height of Europe's sovereign debt crisis in May, when prices
reached both the highs and the lows for the year.
                                
 Prices were also under pressure from a stronger dollar on
Wednesday, which outdid the lift provided by rising Asian stock
markets. The greenback gained about 0.26 percent against a
basket of currencies, after falling 0.4 percent the previous
day. <.DXY>
                                
 Japan's Nikkei average rose on Wednesday, with exporters
such as Canon Inc <7751.T> gaining after strong U.S. corporate
earnings helped Wall Street rise a day earlier. [.T] [.N]
                                
 Encouraging industrial production data from the U.S. also
boosted U.S. equities on Tuesday.
                                
 "We are still in expansionary territory, and beyond the
somewhat weaker summer months, a pick-up in activity should
translate into rising oil consumption in the U.S.," Graber
said.
                                
 The U.S. National Hurricane Center said late on Tuesday
that a tropical wave over the central Caribbean Sea had a 10
percent chance of developing into a tropical cyclone over the
next 48 hours. [ID:nN17268566]
 (Editing by Michael Urquhart)