Oil Falls a Second Day as U.S. Stockpiles Rise, Home Sales Drop

June 23 (Bloomberg) -- Crude oil fell for a second day in New York after an industry report showed an increase in crude supplies and sales of existing U.S. homes unexpectedly declined in May, signaling the economy is struggling to recover.

Oil dropped after purchases of previously owned houses in the U.S. fell 2.2 percent, missing expectations. The American Petroleum Institute said crude stockpiles climbed 3.69 million barrels last week. An Energy Department report today may show inventories declined by 800,000 barrels.

“Sentiment remains very fragile,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Confidence has been rattled in recent months by European fiscal issues and by data in the U.S. that’s been uneven. They’re factors that have left markets cautious.”

Crude oil for August delivery dropped as much as 49 cents, or 0.6 percent, to $77.36 a barrel in electronic trading on the New York Mercantile Exchange, and was at $77.37 at 8:45 a.m. Singapore time. Yesterday, the contract lost 76 cents, or 1 percent, to $77.85.

The July contract fell 61 cents, or 0.8 percent, to settle at $77.21 when it expired at the close of floor trading. Oil has risen 12 percent in the past year.

The API data showed “crude stocks were up quite a bit, distillate stocks were up, and gasoline supplies were up,” Commonwealth Bank of Australia’s Moore said. “I don’t think the oil market is tight at present. Inventories remain high.”

Crude Inventories

U.S. crude oil inventories probably dropped 800,000 barrels in the seven days ended June 18 from 363.1 million the week before, according to the median of 15 analyst estimates surveyed by Bloomberg News.

Crude oil extended declines after a New Orleans federal judge lifted the six-month moratorium on deepwater drilling imposed by President Barack Obama following the largest oil spill in U.S. history.

Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations. More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban. The government said it would appeal the decision.

U.S. home sales decreased to a 5.66 million annual rate in May from 5.79 million in April, figures from the National Association of Realtors showed yesterday in Washington. They were forecast to rise to a 6.12 million rate, according to the median estimate of 74 economists in a Bloomberg News survey.

Brent crude for August delivery traded at $77.80 a barrel, down 24 cents, on the ICE Futures Europe exchange in London at 8:06 a.m. in Singapore. Yesterday, the contract dropped 78 cents, or 1 percent, to $78.04.