* US combined crude, product stocks rise to weekly record
* EIA data shows a drop in crude stock vs API increase
* Coming up: U.S. initial jobless claims, Thursday
(Updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, Aug 18 (Reuters) - Oil prices fell on Wednesday,
but a bounce by equity markets pulled crude futures well above
lows and allowed traders to shrug off data showing combined
U.S. crude and product stocks rose to the highest since weekly
records began in 1990.
U.S. stocks turned positive, led by consumer stocks after a
reassuring same-store sales forecast from discounter Target.
The S&P 500 index rose about 0.2 percent, helping oil bounce
from a six-week low as risk assets benefited from optimism
about the retail industry. []
U.S. front-month September crude oil futures <CLc1> fell 35
cents, or 0.46 percent, to settle at $75.42 a barrel, having
earlier dropped to $73.83, the lowest price since July 7.
Front-month ICE Brent <LCOc1> for October delivery fell 46
cents to settle at $76.47, having flipped into its biggest
premium to the U.S. benchmark in about two months on Tuesday.
That premium then narrowed about 20 cents to 58 cents later
after inventory data showed U.S. crude oil stockpiles,
especially at the key Cushing, Oklahoma, had slipped.
"You had a pop in equities and that helped crude bounce off
its low," said Richard Ilczyszyn, senior market strategist at
Lind-Waldock in Chicago.
Crude slumped early after data from the U.S. Energy
Information Administration showed combined inventories of crude
and refined products, excluding the Strategic Petroleum
Reserve, reached 1.130 billion barrels last week, topping the
1.127 billion barrels struck in September, 1990. On a monthly
basis, inventories peaked at 1.37 billion barrels in 1980.
[]
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Graphic on WTI's relation to Brent and Cushing stocks:
http://link.reuters.com/sap65n
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EIA VS API
The EIA data showed a 818,000 barrel drop in U.S. crude
stocks, roughly in line with analysts' forecast for a 1 million
barrel drop.
But that contrasted with Tuesday's report from the industry
group the American Petroleum Institute, which said crude oil
stocks rose 5.9 million barrels last week. []
"The bearish expectations got out sized on the API report,
and the equity-oil correlation remains intact, as the same
sentiment that raises and dashes expectations for the global
economy produces the same price effects for now," said John
Kilduff, partner at Again Capital LLC in New York.
Oil prices have seesawed in a $65 to $85 trading range
since May as concerns about faltering economic recovery has
stifled rallies and increases in energy demand in emerging
markets have been insufficient to drain bulging global
stockpiles.
Crude oil stocks at Cushing in Oklahoma, the delivery point
for the benchmark U.S. crude futures, fell 687,000 barrels to
37.0 million barrels in the week to Aug. 13, the EIA said. That
left stocks near the record 37.9 million barrels in mid-May.
The high inventories at Cushing helped push North Sea
benchmark Brent crude prices to the premium to U.S. crude
<CL-LCO1=R>.
Also helping keep Brent at a premium to U.S. crude was news
Royal Dutch Shell <RDSa.L> declared force majeure on its
Nigerian Bonny Light oil stream after a rise in sabotage on its
pipelines cut output by up to 100,000 barrels per day.
[]
(Reporting by Alejandro Barbajosa in Singapore and Ikuko
Kurahone in London; Editing by Marguerita Choy)
