LONDON (Reuters) - Oil prices fell for a third day to beneath $76 a barrel on Thursday after a jump in U.S. crude oil inventories outweighed the Federal Reserve's decision to keep interest rates near zero.

A dip in European shares on Thursday also dampened sentiment and reinforced the correlation between oil and equities. EU

U.S. crude for August fell 68 cents to $75.67 a barrel by 1150 GMT after earlier sinking to $75.55 a barrel. Prices pared losses after euro zone industrial new orders for April rose at their fastest annual pace in 10 years, data showed.

ICE Brent futures were down 51 cents at $75.76.

Monetary policy by the Fed and a somewhat weaker dollar are not fully balancing out the weakness in oil demand in the United States, said Eugen Weinberg of Commerzbank, citing high U.S. crude oil stocks.

The Fed's decision is generally supportive for oil prices as low interest rates tend to stoke oil consumption.

But the decision was also accompanied by bearish remarks that the U.S. economic recovery is faltering.

This was born out in the oil market by data on Wednesday showing U.S. crude oil stockpiles rose by an unexpected 2 million barrels, the Energy Information Administration said.

The hike in stocks came despite the Obama administration's ban on deepwater oil drilling in the Gulf of Mexico after the crude oil spill from BP's (BP.L) (BP.N) well in April.

A U.S. judge ruled against the ban on Tuesday in a decision being appealed by the government.

SUPPORT CUSHION

In a further sign that stocks will remain comfortable, the International Energy Agency said on Wednesday that global oil supplies will match expected growth of 1.2 million barrels in daily oil consumption through to 2015.

But while sentiment was weak, some analysts expect $75 a barrel to be a support cushion.

The important psychological level is $75 -- if it drops below there could be further selling pressure, said Weinberg.

Still, oil prices are over $10 above the trough of below $65 a barrel hit a month ago when the spreading European debt crisis raised concerns about the future of regional fuel demand.

The market is expected to closely watch a tropical wave to the south of Cuba that has a 30 percent chance of becoming a tropical cyclone over the next two days, according to the U.S. National Hurricane Center.

Storms could complicate the clean-up effort and affect oil production in the Gulf of Mexico.

Data out of the United States later on Thursday could determine the next market move, analysts said.

Weekly U.S. jobless data and durable goods orders for May is due at 1230 GMT and will offer further insights into the pace of economic recovery in the world's largest oil consumer.

(Additional reporting by Alejandro Barbajosa in Singapore; editing by James Jukwey)

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