FOX: Oil falls for 3rd session as investors offload risk
* Coming Up: API U.S. oil inventories; 2030 GMT (Adds details on refinery explosion, updates prices)
By Alejandro Barbajosa
SINGAPORE, Sept 8 (Reuters) - Oil fell for a third straightsession on Wednesday, with the U.S. benchmark depressed bybrimming petroleum stockpiles, as Asian equities declined oninvestor attempts to reduce risk exposure.
The euro struggled near record lows against the Swissfranc, while Japan's Nikkei average fell more than 2 percent onrenewed concerns about European banks and the global economy,which pulled stock markets down from one-month highs onTuesday.
U.S. crude for October fell 38 cents to $73.71 a barrel by0504 GMT. The front-month contract pared losses on Tuesdayafter an explosion at a refinery in northern Mexico raisedspeculation that fuel imports would increase from the LatinAmerican country, the biggest buyer of U.S. oil products. Ithad 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 economypicks up, but they have been braving that for six monthsthinking that inventory would eventually draw down."
Total U.S. petroleum stockpiles are at their highest sinceweekly records began in 1990.
CUSHING GLUT
Crude stocks at the land-locked benchmark pricing point inCushing, Oklahoma, have remained high, depressing the value ofU.S. crude relative to European Brent, which was trading about$3.65 higher than the U.S. benchmark West Texas Intermediate(WTI: 9.50 ,0.00 ,0.00%) on Wednesday, shedding 38 cents to $77.36.
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 twogrades is known as WTI dislocation, a market condition in whichthe 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 highinventories, while waterbourne Brent has a ready outlet inAsia," Nunan said.
"It does compete with Persian Gulf crude, but it is still alot easier to dissipate excess supply" than for WTI.
Analysts including JP Morgan's Lawrence Eagles expectCushing supplies will rise in coming weeks as U.S. refineriesenter autumn maintenance, reducing their demand for crude.
Summer maintenance at North Sea fields and a strong Uralscrude market have this time also contributed to Brent'swidening premium.
Still, overall U.S. crude inventories probably fell for thefirst time in three weeks last week, down by a moderate 600,000barrels, as refineries reduced imports in preparation forstormy weather, a Reuters poll showed on Tuesday.
Weekly industry and government statistics on inventorieswill be delayed by one day this week, to Wednesday for theAmerican Petroleum Institute and Thursday for the EnergyInformation Administration.
The poll also showed forecasts for a 700,000 barrelincrease in stockpiles of distillates, including heating oiland diesel fuel, and a 900,000 barrel decline in gasolinesupplies.
The U.S. National Hurricane Center was monitoring threetropical systems in the Atlantic basin, one approaching theCaribbean Sea and two near Africa's west coast.
The NHC said cloudiness and showers over the LeewardIslands and northeastern Caribbean Sea were associated withGaston's remnants, but the system had just a 20 percent chanceto become a tropical cyclone again during the next 48 hours.
It was too early to tell whether any of the systems mightmove into the Gulf and disrupt offshore oil and gas production.
A compressor failure at Mexico's Cadereyta refinery's gasoil 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 supportgasoline and diesel production, would be out of service, but inthe meantime it said crude oil processing has been reduced by15,000 bpd to 200,000 bpd. (Editing by Manash Goswami)
