Oil Falls After Industry Report Shows Gain in Crude Inventories

July 22 (Bloomberg) -- Oil fell for the first time in six days after an industry report showing an increase in crude supplies in the U.S. prompted speculation government figures due today may show an unexpected gain.

Stockpiles rose 3.1 million barrels to 349.9 million last week, the first increase since April, the industry-funded American Petroleum Institute reported yesterday. An Energy Department report today is forecast to show that crude supplies in the biggest energy consuming nation dropped 2.1 million barrels, according to a Bloomberg News analyst survey.

“It is going to be difficult for oil to forge higher if we continue to get indications of weak fundamentals,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. If the API report is “any indication of how the DOE numbers are going to come in tonight, it’s a pretty bearish picture.”

Crude oil for September delivery dropped as much as 1.2 percent to $64.84 a barrel on the New York Mercantile Exchange, and was at $64.94 at 9:18 a.m. Sydney time. Yesterday, it rose 32 cents to end the session at $65.61. The August contract expired yesterday.

Oil-supply totals from the API and DOE moved in the same direction for the past six weeks and 76 percent of the time over the past four years, according to data compiled by Bloomberg.

“Rising product inventories don’t bode well for demand for crude,” Hassall said. “I think $60 to $65 is a probable range for the short-term.”

Gasoline Supplies

Inventories of gasoline rose 1.3 million barrels to 213.6 million, the API report said. The Energy Department is expected to say supplies increased by 650,000 barrels in the week ended July 17, according to the analyst survey.

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 August delivery dropped 1.95 cents, or 1.1 percent, to $1.7925 a gallon New York at 8:58 a.m. Sydney time. Yesterday, it climbed 2.26 cents, or 1.3 percent, to $1.812, the highest settlement since July 1.

Stockpiles of distillate fuel, a category that includes diesel and heating oil, probably rose 1.5 million barrels, according to the survey.

The department is scheduled to release its weekly petroleum supply report today at 10:30 a.m. in Washington.

Brent crude for September settlement rose 43 cents, or 0.7 percent, to end the session at $66.87 a barrel on London’s ICE Futures Europe Exchange. It was the highest close since July 1.