* Oil drops towards $117 after U.S. inventory data
* Data shows big increases in crude and distillate stocks
* White House says punitive measures needed against Iran
(Recasts after EIA data, comment, updates prices)
By Santosh Menon
LONDON, Aug 6 (Reuters) - Oil fell to a new three-month low
near $117 a barrel on Wednesday after government data showed
bigger-than-expected increases in crude and distillate stocks in
the United States last week, the world's top oil consumer.
U.S. light crude <CLc1> was $1.69 down at $117.48 a barrel
by 1538 GMT, off highs of $120.49 hit earlier in the session.
London Brent crude was down $1.66 at $116.04 a barrel.
The U.S. Energy Information Adminsitration (EIA) said crude
oil stocks in the world's biggest energy user rose by 1.7
million barrels last week, against expectations of an increase
of 300,000 barrels. []
Gasoline inventories fell by 4.4 million barrels compared
with forecasts of a 1.2 million barrels drop, while stocks of
distillate fuels, which include heating oil and diesel, rose by
2.8 million barrels, 700,000 barrels more than expected.
"It's mixed data -- it's bearish for distillates, bearish
for crude oil and bullish for gasoline. One key question is how
much we're going to make out of the draw in gasoline when we
only have one month left in the driving season," said Tim Evans,
energy analyst at Citi Futures Perspective.
Oil earlier bounced off near three-month lows after an
explosion on the Baku-Tbilisi-Ceyhan oil pipeline in eastern
Turkey late on Tuesday halted oil flows along the key
pipeline, providing a bullish backdrop.
It added to Nigerian supply concerns and the threat of
disruptions from Iran should its standoff with the West worsen.
Oil has fallen almost $30 from its mid-July peak of $147.27
a barrel -- a drop of nearly 20 percent -- amid growing evidence
that high prices have finally started to take a toll on demand.
"The next support area is $117. If we break through $117 we
are probably not going to be able to create any upward momentum
in the market," said Rob Kurzatkowski, futures analyst at
optionsXpress in Chicago.
In the United States, Tropical Storm Edouard, the fifth of
the 2008 Atlantic hurricane season, hit the Texas coast without
causing any major disruptions to U.S. energy operations, which
also helped to squash supply concerns and bring prices down.
The storm caused minor oil and natural gas outages as it
passed through the U.S. Gulf of Mexico, and companies began to
fly evacuated staff back to rigs. []
Traders kept a watchful eye on news about OPEC member Iran,
the world's fourth biggest oil producer, which remains locked in
a tense standoff with the West, notably the United States, over
its nuclear programme.
Iran says it is only seeking to master nuclear technology to
generate electricity and has repeatedly refused to halt its
atomic work, prompting the U.N. Security Council to impose three
rounds of penalties on Tehran since 2006.
The U.S. State Department said major powers had agreed on
Wednesday to consider more U.N. sanctions against Iran after
Tehran gave no concrete reply to their demand that it freeze its
nuclear activities. [ID:nL6271281}
(Additional reporting by Seng Li Peng in Singapore and Barbara
Lewis in London; editing by James Jukwey)
