* Oil hit by decline in equities as investors shun risk
* Brent premium to U.S. crude widest since mid-May
* Coming Up: API U.S. oil inventories at 2030 GMT
(Adds analyst quote, updates prices)
By David Turner
LONDON, Sept 8 (Reuters) - Oil fell below $74 a barrel on
Wednesday, declining for a third straight session, with the U.S.
benchmark hit by weakness in equity markets.
European equities declined more moderately in early trading
[], following on from losses in Japan. The MSCI All Country
World Index was also slightly down on the day. <.MIWD00000PUS>
U.S. crude for October <CLc1> fell 47 cents to $73.62 a
barrel by 0951 GMT.
Traders attributed the decline to the weakness in share
prices, which have been highly correlated with oil prices for
most of 2010 because both are seen by funds as indicators of the
strength of global economic recovery.
"Today, oil is a little bit under pressure from weakness in
equity markets worldwide," said Eugen Weinberg, commodities
analyst at Commerzbank in Frankfurt.
A unexpected fall in German exports in July after two months
of strong gains added to evidence that a cooling world economy
is slowing the German industrial juggernaut somewhat.
[]
The market is also awaiting the release of weekly U.S.
industry and government statistics on inventories, delayed by a
day following Monday's Labor Day holiday in the United States.
"It's well in a range of between $75 and $80 and we need
some strong news to push prices out of this range," Christophe
Barret, an oil analyst at Credit Agricole, said.
"Last week's data was a bit weak and this week will be
interesting as it will reflect what happened just ahead of the
Labor Day weekend."
BRENT-U.S. CRUDE SPREAD
U.S. crude is trading at a steep discount of $3.42 to
futures based on the European Brent benchmark <LCOc1>. The gap
reached a peak of $3.91 earlier in the day, its highest since
mid-May. Brent was 72 cents down on the day at $77.02.
Weinberg said U.S. crude's discount to Brent was "definitely
due to investment outflow, weaker demand, and high oil
inventories (in the United States)."
Total U.S. petroleum stockpiles are at their highest since
weekly records began in 1990.
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For a graphic on Brent's premium to WTI, click:
http://graphics.thomsonreuters.com/AS/0810/ABE_20100809105935.jp
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Maintenance at North Sea fields and a strong Urals crude
market have also contributed to Brent's premium.
However, 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, according to a Reuters poll on Tuesday. []
The American Petroleum Institute will publish its weekly
U.S. industry statistics on inventories at 2030 GMT on Wednesday
with the Energy Information Administration publishing government
figures on Thursday.
The poll also forecast a 700,000 barrel increase in
stockpiles of distillates, including heating oil and diesel
fuel, and a 900,000 barrel decline in gasoline supplies.
(Additional reporting by Marie-Louise Gumuchian in London;
Alejandro Barbajosa in Singapore; editing by James Jukwey and
Alex Lawler)
