* Tropical Storm Katia strengthening in Atlantic * U.S. crude stocks up last week, gasoline down - API * Coming up: EIA oil data, 10:30 a.m. EDT Wednesday NEW YORK, Aug 31 (Reuters) - U.S. crude futures fell on Wednesday after an industry report the previous day showed crude stocks rose last week and with September refined products heading for expiration at the end of the day's open outcry session. U.S. crude stocks rose 5.1 million barrels last week, though stocks at the key Cushing, Oklahoma, delivery hub fell slightly, the industry group the American Petroleum Institute said late on Tuesday. [API/S] Distillate stockpiles rose 276,000 barrels, but gasoline inventories fell 3.1 million barrels. Ahead of the API report, a Reuters analyst survey yielded a forecast for crude stocks to be up 400,000 barrels, with distillates expected to be up 600,000 barrels and gasoline stocks seen down 1.1 million barrels. [EIA/S] The U.S. Energy Information Administration's weekly inventory report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday. The pace of U.S. private sector job growth slowed in August for the second month in a row with employers adding 91,000 positions, a report by payrolls processor ADP said. The report also revised lower the July increase. [ID:nEAPAV0EH0] The key nonfarm payrolls report for August will be released on Friday morning. U.S. stock index futures gained on Wednesday on comments from Federal Reserve officials that boosted hopes of more monetary stimulus. [.N] FUNDAMENTALS * On the New York Mercantile Exchange, October crude CLV1 fell 46 cents, or 0.5 percent, to $88.44 a barrel by 8:49 a.m. EDT (1249 GMT), trading from $87.67 to $89.18. * Tropical Storm Katia has strengthened gradually in the Atlantic as it moves west-northwest, the U.S. National Hurricane Center (NHC) said. There are still no coastal watches or warnings in effect, NHC added. [ID:nL4E7JV1KA] * A tropical wave over western Cuba and the northwestern Caribbean Sea still was being given a 10 percent chance of becoming a cyclone in the next 48 hours, the U.S. NHC said. [ID:nL4E7JV0TF] * Japan's total oil product sales in July fell 0.6 percent from a year earlier government data showed, but the decline was the narrowest in five months. [ID:nL4E7JV0IK] * NAL Energy Corp (NAE.TO) said it has extinguished a fire that damaged an oil battery at one of its facilities in Saskatchewan and expects its oil production to be hurt by 1 percent due to the incident. [ID:nL4E7JV22F] * State-owned China National Petroleum Corp (CNPC), parent of PetroChina (0857.HK), removed the Dalian refinery chief following a second fire in less than two months. [ID:nL4E7JV1HE] * Muammar Gaddafi remains on the run and forces loyal to him are defying an ultimatum set by Libya's interim council. [ID:nL5E7JU2V7] * Syrian troops backed by tanks raided houses in Hama, searching for activists behind five months of protest against President Bashar al-Assad, residents said. [ID:nL5E7JV09V] MARKETS NEWS * World stocks rose for the fourth session in a row on hopes the U.S. Federal Reserve will provide another stimulus package, though global shares were still set to post their biggest monthly drop in 15 months. Copper prices also rose while the dollar slipped against the Swiss franc and the yen. [MKTS/GLOB] * Gold fell after a near 3 percent rally the day before sparked by Federal Reserve comments on possible measures to boost U.S. growth, and the bullion price is still set for its biggest monthly gain in nearly two years. [GOL/] UPCOMING DATA/EVENTS * The Institute of Supply Management Chicago August index of manufacturing activity 9:45 a.m. EDT (1345 GMT) on Wednesday. Economists forecast a reading of 53.5 compared with 58.8 in July. * Commerce Department July factory orders 10 a.m. EDT (1400 GMT) on Wednesday. Economists expect a rise of 1.9 percent compared with a 0.8 percent drop in June. * U.S. Energy Information Administration oil inventory data at 10:30 a.m. EDT (1430 GMT) on Wednesday. * NYMEX September RBOB gasoline and heating oil futures contracts expire on Wednesday. 8:49 LAST NET PCT LOW HIGH CURRENT DAY AGO CHNG CHNG VOL VOL CLc1 88.44 -0.46 -0.5% 87.67 89.18 69,460 208,605 CLc2 88.71 -0.48 -0.5% 88.00 89.53 39,077 41,773 LCOc1 114.08 0.06 0.1% 113.52 114.65 71,690 184,907 RBc1 3.0134 0.0176 0.6% 3.0021 3.0245 518 18,442 RBc2 2.8470 0.0055 0.2% 2.8368 2.8623 4,408 39,760 HOc1 3.0650 -0.0042 -0.1% 3.0538 3.0724 628 16,521 HOc2 3.0723 -0.0044 -0.1% 3.0591 3.0893 4,509 40,800 * NYMEX crude oil for October CLc1 fell 46 cents to $88.44 a barrel by 8:49 a.m. in volume of 69,460 lots. (Reporting by Robert Gibbons;editing by Sofina Mirza-Reid)

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