Oil Drops Below $69 After API Report Shows Gasoline Supply Gain

June 24 (Bloomberg) -- Crude oil dropped more than 1 percent after an industry report showed an increase in U.S. gasoline inventories and a small drop in crude stockpiles.

Gasoline supplies increased by 3.7 million barrels last week, the industry-funded American Petroleum Institute said yesterday. Oil rose yesterday as the U.S. currency slipped the most in a month against the euro on speculation that the Federal Reserve will temper expectations of an interest-rate increase this year.

“The API data that was released this morning showed a sharp rise in U.S. gasoline inventories,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. “There was an increase in product inventories and only a very small movement in crude inventories to the extent the oil price is down in early trading.”

Crude oil for August delivery fell as much as 78 cents, or 1.1 percent, to $68.46 a barrel and was at $68.69 at 9:54 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, the contract gained $1.74, or 2.6 percent, to settle at $69.24 a barrel.

The Energy Department is expected to report that supplies of crude oil dropped 950,000 barrels, according to the median of 14 analyst responses in the Bloomberg News survey. Stockpiles fell 3.87 million barrels in the week ended June 12, the department said last week.

Inventories of gasoline and distillate fuel, a category that includes heating oil and diesel, increased, according to the respondents. The department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.

‘Suppress the Price’

“A rise in gasoline inventories and a lower than expected drop in crude supplies will help suppress the price of crude oil,” Mike Sander, an investment adviser with Sander Capital in Seattle said in an e-mail.

Gasoline supplies increased to 211.4 million barrels in the week ended June 19, while crude supplies fell 72,000 barrels to 356.6 million, according to the API report. Distillate fuel stockpiles rose 2.3 million barrels to 153.9 million, the reports said.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the energy Department for its weekly survey.

Gasoline for July delivery dropped 2.97 cents, or 1.6 percent, to $1.8635 a gallon at 9:08 a.m. Sydney time. Yesterday, it increased 3.35 cents, or 1.8 percent, to end the session at $1.8932 a gallon in New York.

OPEC Output

OPEC won’t reduce crude oil production when it meets in September and will ask for more compliance with existing quotas, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah said in parliament yesterday.

The group plans to meet on Sept. 9 in Vienna. OPEC agreed at three meetings last year that the 11 members with production targets would cut output by 4.2 million barrels a day.

The dollar traded at $1.4075 per euro as of 6:38 a.m. in Tokyo following yesterday’s drop of as much as 1.75 percent, the most since May 8.

Brent crude for August settlement was untraded on London’s ICE Futures Europe exchange early today. It rose $1.82, or 2.7 percent, to end the session at $68.80 a barrel yesterday.