Oil Falls a Third Day on Gain in U.S. Supplies, Home Sales Drop

June 24 (Bloomberg) -- Crude oil declined for a third day in New York after U.S. government reports showed an unexpected gain in supplies and a decline in purchases of new homes.

Oil dropped 1.9 percent yesterday after the Energy Information Administration reported crude stockpiles rose 2.02 million barrels to 365.1 million in the week ended June 18. Supplies were forecast to drop 800,000 barrels, according to analysts surveyed by Bloomberg News. Sales of new homes declined in May to a record low as a tax credit expired.

“Sentiment is still pretty weak,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The fall seems mostly due to the EIA data. On the demand front, it’s still negative and still very uncertain.”

Crude oil for August delivery dropped as much as 42 cents, or 0.6 percent, to $75.93 a barrel in electronic trading on the New York Mercantile Exchange. It was at $76.14 at 9:56 a.m. Sydney time. Yesterday, the contract fell $1.50 to $76.35, the biggest drop for a front-month contract since June 11.

“There are still many weak sectors in the U.S. economy,” said Mike Sander, an investment adviser at Sander Capital Advisors in Seattle. “Prices should remain depressed. There could be a bit more room to go to the downside.”

Sales of new homes slipped to an annual pace of 300,000 last month from April, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed yesterday in Washington.

Interest Rates

Federal Reserve officials retained a pledge to keep the benchmark interest rate at a record low and signaled that European indebtedness may harm U.S. growth. Fed Chairman Ben S. Bernanke is trying to cut unemployment that’s close to a 26- year-high and maintain the recovery as new-home sales slide and growth in private payrolls weakens.

Imports of crude oil climbed 4.3 percent to 10.1 million barrels a day, the highest level since the week ended Jan. 2, 2009, the Energy Department report showed. Fuel imports surged 10 percent to 2.32 million barrels a day.

Gasoline supplies fell 762,000 barrels to 217.6 million last week, the report showed. An 180,000-barrel drop was forecast, according to the median of 15 responses in the Bloomberg News survey.

Refineries operated at 89.4 percent of capacity, up 1.5 percentage points from the prior week and the highest level since April, the report showed.

Brent crude oil for August delivery slipped $1.77, or 2.3 percent, to end the session at $76.27 a barrel on the London- based ICE Futures Europe exchange yesterday.

Slower Demand Growth

The International Energy Agency, an adviser to oil- consuming nations, said in a report yesterday that growth in world oil demand will slow in the next five years as the pace of Chinese consumption moderates.

The IEA estimates that the rate of annual demand growth will shrink each year between now and 2015. Consumption will climb 1 percent to 91.93 million barrels a day in 2015, down from 1.5 percent growth in 2010, according to the Paris-based agency’s Medium-Term Oil and Gas Markets 2010 report.

Chinese oil demand is expected to reach 11.63 million barrels a day by 2015, up from 9.16 million this year, according to the IEA data. The pace is slowing, with consumption rising 4.1 percent in 2015, compared with 7.6 percent this year, according to the report.

The rate of consumption decline in developed economies is accelerating. Total demand from the 30 industrialized countries that belong to the Organization for Economic Cooperation and Development will drop 0.9 percent in 2015 compared with a 0.1 percent fall in 2010, the agency estimates.