Oil Falls to One-Month Low After Petroleum Supplies Surge to 20-Year High

Crude oil fell to a one-month low after the U.S. Energy Department said total petroleum stockpiles surged to the highest level in at least 20 years.

Inventories of crude and fuels climbed 5.34 million barrels to 1.13 billion in the week ended Aug. 13, according to the department. Supplies of distillate fuel, which include heating oil and diesel, rose to the highest level since 1983. Stockpiles of crude and gasoline fell less than analysts surveyed by Bloomberg News projected. Fuel demand increased.

“Our inventories are rising at a time of year when they usually decline, so we’re getting a growing surplus,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Demand has improved but supply has risen even faster.”

Crude oil for September delivery fell 34 cents, or 0.5 percent, to $75.43 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $73.83, the lowest level since July 7.

Petroleum stockpiles have slipped in the second week of August for three of the past five years, including a decline of 12.8 million barrels last year. The department began to compile weekly inventories in 1990, said Jonathan Cogan, an Energy Information Administration spokesman in Washington. Prior to 1990 the information is monthly.

Distillate Stockpiles

Inventories of distillate fuel climbed 1.07 million barrels to 174.2 million last week. Supplies were forecast to increase by 1.5 million barrels, according to the median of 18 analyst estimates in a Bloomberg News survey.

“We got another big build in distillate supplies,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “This is a well- supplied market.”

Stockpiles of crude oil fell 818,000 barrels to 354.2 million barrels, the report showed. Supplies were estimated to drop by 1 million barrels, according to the survey.

Gasoline inventories dropped 39,000 barrels to 223.3 million, the department said in a weekly report. A 375,000- barrel decline was forecast by the analysts surveyed.

Total U.S. fuel demand rose 1.3 percent to 19.7 million barrels a day, according to the department. The gain was the fourth in five weeks.

The increase in petroleum stockpiles occurred after a serious of reports bolstered concern that the U.S. economic recovery is slowing. A Labor Department report on Aug. 12 showed that initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since February.

“Some of the recent bearish economic is bleeding into the oil market,” Mueller said.

Stock Market

Oil prices rebounded from the session’s lows after equities increased on takeover speculation. Ryland Group Inc. and Meritage Homes Corp. surged more than 3 percent as Citigroup Inc. predicted more mergers in the home-building industry, and Potash Corp. of Saskatchewan Inc. gained on speculation that BHP Billiton Ltd. will boost its bid for the company.

The Standard & Poor’s 500 Index rose 0.5 percent to 1,097.90 and the Dow Jones Industrial Average increased 0.4 percent to 10,451.30 as the Nymex floor closed.

Plans by China to curb oil demand growth by 2020 will have “major implications” for crude prices and refining margins, a consultant said.

China may allow oil consumption to peak in 2020 at about 13 million barrels a day, after which growth will slow to about 150,000 barrels a day, or about 1.1 percent a year, Fereidun Fesharaki, chairman of Singapore-based FACTS Global Energy, said in an e-mailed note today. Consumption grew last year at 6.7 percent to 8.6 million barrels a day, according to BP Plc’s annual energy review.

Brent crude for October settlement dropped 50 cents, or 0.7 percent, to $76.43 a barrel on the London-based ICE Futures Europe Exchange.

Oil volume in on the Nymex was 713,907 contracts as of 2:34 p.m. in New York. Volume totaled 930,829 contracts yesterday, the highest since May 20 and 46 percent above the average of the past three months. Open interest was 1.27 million contracts.