* 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 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
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
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
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
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