UPDATE 6-Oil prices steady after U.S. fuel inventories build

* U.S. crude stockpiles fall by 3.1 mln bbls in latest week -EIA

* Benchmarks lost more than 3% on Tuesday

* Iran says it came to help of foreign oil tanker in the Gulf (Updates prices, market activity, adds commentary; changes byline, dateline, previous LONDON)

NEW YORK, July 17 (Reuters) – Oil prices on Wednesday steadied after plummeting more than 3% in the previous session, but were weighed down by U.S. government data that showed large builds in refined product stockpiles.

Brent crude futures rose 23 cents to $64.58 a barrel by 10:56 a.m. EDT (1456 GMT). U.S West Texas Intermediate (WTI) crude futures fell 9 cents to $57.53 a barrel. Both benchmarks shed more than 3% on Tuesday.

While data on Wednesday from the U.S. Energy Information Administration showed a larger-than-expected drawdown in crude stockpiles last week, large builds in refined product inventories kept prices muted.

U.S. crude inventories fell 3.1 million barrels, EIA data showed, more than analysts’ forecasts for a decrease of 2.7 million barrels.

Gasoline stocks rose 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel drop. Distillate stockpiles rose by 5.7 million barrels, versus expectations for a 613,000-barrel increase, the EIA data showed.

“The focus this time of year is gasoline, and that data point was squarely bearish,” said John Kilduff, a partner at Again Capital Management in New York.

Some of the EIA data was affected by Storm Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane. More than half of daily crude production in the Gulf of Mexico remained offline on Tuesday, the Bureau of Safety and Environmental Enforcement (BSEE) said, as most oil companies were re-staffing facilities to resume production.

The U.S. drilling regulator said 1.1 million barrels per day of oil, or 58% of the region’s total, remained shut.

Oil prices slumped on Tuesday on increased hopes for a return of Iranian crude to the global oil market after U.S. President Donald Trump said progress had been made with Tehran, signaling tensions could ease in the Middle East.

However, Iran later denied it was willing to negotiate over its ballistic missile programme, contradicting a claim by U.S. Secretary of State Mike Pompeo, and appearing to undercut Trump’s statement.

“It is hard to believe that either the United States or the Iranian stance would change drastically, therefore yesterday’s sell-off might turn out to be an excellent buying opportunity,” PVM analysts wrote.

U.S. officials say they are unsure whether an oil tanker towed into Iranian waters was seized by Iran or rescued after facing mechanical faults as Tehran asserts, creating a mystery at sea at a time of high tension in the Gulf.

(Additional reporting by Shadia Nasralla in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and Louise Heavens)

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