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Crude down again on oil products weakness; Greece, Iran eyed

An oil refinery is seen with the Rocky Mountains freshly covered with snow in the background in Denver October 14, 2014. REUTERS/Rick Wilking/Files

By Barani Krishnan

NEW YORK (Reuters) - Crude oil fell for a second straight day on Thursday, weighed by weaker U.S. refined fuels markets and potential negative impact from Greece's debt crisis on European energy demand.

Worries of a possible glut emerging in U.S. gasoline and diesel supply after large builds in both last week added to concerns that millions of barrels of Nigerian crude were floating around the Atlantic Basin looking for buyers. [EIA/S]

Brent crude settled down 29 cents, or 0.5 percent, at $63.20 a barrel.

U.S. crude, also known as West Texas Intermediate or WTI, fell 57 cents, or almost 1 percent, to end at $59.70.

"It feels like the bulls have thrown in the towel in their pursuit of pushing WTI up to $65," said Scott Shelton, broker with ICAP in Durham, North Carolina.

U.S. crude has been trapped between $59 and $61 over the past two weeks while Brent has languished at $62 to $65.

"I'm really looking for a breakout of the recent trading ranges to take new positions," said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York.

Volumes were relatively light, with the front-month in both and Brent U.S. crude registering just over 200,000 lots, Reuters data showed.

Gasoline and ultra-low sulfur diesel (ULSD) futures settled down nearly 1 percent each.

Refined products have dictated much of the price direction for crude lately as focus turned towards demand for motoring fuels ahead of the peak U.S. summer driving season.

Gasoline stockpiles rose 680,000 barrels last week, more than twice the amount forecast by analysts in a Reuters poll, data from the U.S. Energy Information Administration showed on Wednesday.

Inventories of distillates, which include diesel and heating oil, jumped 1.8 million barrels, more than an expected build of 1 million.

"We may have overproduced products in recent weeks," said Shelton, the ICAP broker, said. "Stock trends in ULSD are getting pretty negative."

In Athens, Greece again failed to reach a deal with international creditors, raising concerns about its potential debt default and how that could impact larger Europe and the region's oil demand.

Traders and investors were also eyeing progress toward a June 30 deadline for an Iran nuclear accord that would be key to lifting Western sanctions on Tehran's oil exports.

"The prospect of another 1 million barrels per day increase in supply from Iran ... could easily drag prices below $60 again," London-based Capital Economics said in a report.

(Additional reporting by Libby George in London and Keith Wallis in Singapore; Editing by Meredith Mazzilli and Marguerita Choy)