Oil futures continued lower after yesterday's higher than expected US inventory report. At 10.56 am, September-dated Brent futures contracts were down 77 cents at 55.88 usd a barrel Meanwhile, US benchmark September-dated contracts were down 76 cents at 57.26, after yesterday's August-dated contract expiry. The US Department of Energy yesterday reported crude stocks had fallen by 900,000 barrels to 320 mln barrels for the week ending July 15. Analysts were expecting to see falls of around 3.7 mln barrels because of hurricane-related disruptions to production and crude imports. "Oil prices are much weaker today due to yesterday's higher than expected crude imports of 800,000 barrels into the US during last week," said Bache Financial broker Christopher Bellew. The market had anticipated that the recent hurricane would have deterred shipments to a much greater degree, he added. The DoE also reported distillate stocks, which include heating oil, diesel and jet fuel, showed a larger-than-forecast rise. Stocks rose for a ninth consecutive week by 2.3 mln barrels to 123 mln, against predictions of a rise of 1.7 mln barrels. "There is now a heating oil surplus. The stocks seem to be building at an above-average rate for the time of year, and this is helping crude prices to fall, as worries about fourth quarter shortages begin to fall away," Bellew said. A mild winter will limit price gains on heating oil, and in turn crude prices, Bellew noted. Gasoline stocks however fell by 1.3 mln barrels, against predictions of a 900,000 barrel stock draw as the 'summer driving season' continued to erode stocks for the third week. "A fall in gasoline stocks is entirely normal for the (high demand) time of year," and a slightly lower result is not cause for concern, Bellew added. In other oil market news, the US embassy in Riyadh yesterday has warned in a statement that it has heard of plans for new terrorist attacks in Saudi Arabia "The American embassy in Riyadh advises all American citizens living in Saudi Arabia that it has received indications of operational planning for a terrorist attack or attacks in the kingdom," the statement said