* Kansas refinery shutdown damps demand for U.S. crude
* U.S. crude inventories down, fuel stockpiles rise -EIA
* OPEC oil output rises in July from June -Reuters survey (Adds fall in U.S. equities markets)
By Anna Louie Sussman
NEW YORK, July 31 (Reuters) - U.S. crude oil tumbled more than $2 on Thursday, going below $98 a barrel, hitting the lowest level since March on news of a potentially lengthy shutdown at a Kansas oil refinery, while Brent also slipped amid signs of robust OPEC oil production.
CVR Refining said its 115,000-barrel-per-day refinery in Coffeyville, Kansas might be shut for as long as four weeks after a fire in a gasoline-related unit on Tuesday. The refinery is a major consumer of benchmark West Texas Intermediate (WTI) crude.
U.S. equity markets slid alongside crude, with the Dow and the S&P 500 posting their first monthly decline since January, while the Nasdaq fell for a third month in the last five.
The S&P 500 posted its worst daily decline since April and first monthly drop since January on Thursday as economic data sparked concern that the Federal Reserve could raise interest rates sooner than some have expected.
Earlier, prices fell after a Reuters survey showed OPEC pumped more oil in July, further tempering concerns that unrest in North Africa and the Middle East could hurt global oil supplies.
Brent crude for September delivery settled down 49 cents at $106.02 a barrel. Brent has fallen more than 6 percent in July, on track for its biggest monthly decline since April 2013.
U.S. crude futures for September delivery dropped $2.10 to settle at $98.17 a barrel. The contract hit an intraday low of $97.95, its lowest since mid-March. U.S. crude is on course for a monthly drop of nearly 7 percent, its biggest since May 2012.
A lengthy shutdown of the Coffeyville refinery could temper demand for WTI crude. Traders say this should help rebuild inventories in the Cushing, Oklahoma, delivery hub that have fallen this summer to six-year lows.
“If refinery runs pull back, we will see rebounds in crude stocks,” said Phil Flynn, analyst at the Price Futures Group in Chicago.
Jack Lipinski, CVR’s chief executive officer, said Thursday on a conference call that damage to the unit was “very limited” but they had been forced to shut the entire plant due to damage to the distributed control and data systems.
Also around midday, WTI fell below a technical marker of $99. Traders said this could trigger further technical selling.
“We broke a key technical level of last week’s $99 low, that may have triggered some momentum selling,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
“It seems all fears of supply disruption from geopolitical risk have evaporated in a little less than two weeks.”
Rising gasoline stockpiles in the United States, even during the peak summer driving season, have raised concerns about the demand outlook in the world’s largest oil consumer.
Oil prices have steadily eased after hitting multi-month highs in June on world political tensions.
In Libya, rival militia brigades resumed their battle for control of Tripoli’s main airport. Crude oil output has remained around 500,000 bpd.
Iranian oil exports increased after the country met the terms of a six-month agreement on its nuclear program in mid-July, softening Western sanctions.
In Europe, traders are watching how sanctions will affect oil exports from Russia.
The head of Russia’s second-largest oil producer Lukoil said Western sanctions would force the company to reduce its investment program. (Additional reporting by Rowena Caine and Jack Stubbs in London; Editing by Keiron Henderson, David Gregorio and James Dalgleish)