UPDATE 7-Oil slips a second day on pipeline restart view

* Repairs to Enbridge's Canada-U.S. pipeline completed

* EIA says crude, products inventories fell last week

* Coming up: US jobless claims data, 8:30 a.m. EDT, Thurs (Updates with settlement prices, market activity)

By Robert Gibbons

NEW YORK, Sept 15 (Reuters) - Oil prices fell a second consecutive day on Wednesday on expectations that a key Canada-U.S. crude pipeline will resume after a week-long interruption, although government data showing a drop in U.S. crude stocks limited losses.

Disappointing regional manufacturing data and slower U.S. industrial production growth, coupled with a dive in the Japanese yen, also pressured, extending oil prices' retreat from a one-month high above $78 a barrel reached on Monday.

U.S. crude for October delivery fell 78 cents, or 1.02 percent, to settle at $76.02 per barrel, trading from $74.66 to $76.65, with crude's losses concentrated at the front end of the price curve as traders factored in a quicker resumption in Canadian exports that would boost supplies.

In London, expiring ICE October Brent crude fell 25 cents to settle at $78.91 a barrel, leaving the discount for U.S. crude futures to Brent near $3 a barrel . It fell to less than $1.40 earlier this week on expectations the shut pipeline might help drain high inventories.

Canada's Enbridge , hit by three oil pipeline outages since July, said repairs on its U.S.-bound Line 6A crude pipeline were completed on Tuesday but that it would be up to the U.S. Department of Transportation whether 6A could be restarted by the end of the week. [ID:nNYL002046] [ID:nN15154855]

The Department of Transportation's Pipeline and Hazardous Materials Safety Administration said Wednesday it had not set a date to resume flows along Line 6A and that the restart of any pipeline required a "comprehensive review." [ID:nN15175370]

"The market driver today is the expectation that Enbridge (pipeline) will come back online sooner rather than later," Olivier Jakob, consultant with Petromatrix, said.

Crude oil inventories in the United States, the world's top oil consumer, fell 2.49 million barrels in the week to Sept. 10, mostly in line with analysts' forecast, weekly data from the Energy Information Administration showed. [EIA/S]

U.S. distillate stocks, which include heating oil and diesel fuel, fell 340,000 barrels, against a forecast for about the same size build. Gasoline stocks fell 694,000 barrels, in line with expectations.

The Enbridge pipeline shutting last Thursday was expected to help reduce stocks at the Cushing, Oklahoma, hub, delivery point for U.S. benchmark crude West Texas Intermediate. Cushing stocks did slip 581,000 barrels last week, the EIA said.
Graphic on Brent/WTI spread: http://link.reuters.com/vew63p For yen strength: http://r.reuters.com/puw56n Crude oil prices in major currencies [ID:nLDE68E11E]

Along with some recent unseasonal dips in U.S. distillate stocks, refinery maintenance [REF/E] and strong diesel cargo prices [ID:nLDE68E280] in Europe have helped push the U.S. heating oil crack spread -- the profit that refiners make in processing crude into fuel -- to surge to its highest level in nearly four months. [ID:nN15175496]

The spread jumped on Wednesday to a high of $13.99 a barrel, the highest level since the spread rose to $14.21 on May 20.

"A stout European gas oil trade is still providing support (to heating oil crack spreads) as has some relatively favorable demand indications out of the past couple of EIA weekly releases," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a research note.

Most financial markets were roiled by Japan's intervening to weaken its currency for the first time in six years. The dollar rose more than 3 percent against the yen, but analysts said it was uncertain the intervention would depress the currency for long. [USD/]

But the dollar seesawed and was little changed against the euro , the currency pairing most oil traders focus on. The dollar index <.DXY>, measuring the greenback against a basket of currencies, was stronger but in choppy trading. (Additional reporting by Gene Ramos in New York, Ikuko Kurahone in London and Alejandro Barbajosa in Singapore; Editing by Walter Bagley)