Oil Falls a Second Day After U.S. Supplies Gain, Consumer Confidence Drops

Oil fell for a second day in New York after an industry report showed U.S. crude inventories rose and the Conference Board said confidence among the nation’s consumers fell, signaling growth and energy demand may falter.

Oil dropped the most in more than three weeks yesterday as the confidence index declined to the lowest level in five months. The gauge was at 50.4 from a revised 54.3 in June, the New York- based private research group showed. It was forecast to drop to 51, according to a Bloomberg News survey. Crude supplies rose by 3.08 million barrels, the American Petroleum Institute said.

“Sentiment really hasn’t improved,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone. “There was a sell-off in the crude market because of a fall in U.S. consumer confidence. The fundamentals are still weak.”

Crude oil for September delivery dropped as much as 62 cents, or 0.8 percent, to $76.88 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.13 at 10:15 a.m. Sydney time. Yesterday, the contract fell $1.48, or 1.9 percent, to $77.50. Futures have declined 3 percent since the start of the year.

U.S. crude oil inventories rose to 356.3 million, the Petroleum Institute said yesterday. Gasoline stockpiles climbed 877,000 barrels to 222.3 million, the report showed.

Government Report

A government report today may show U.S. oil inventories dropped to a four-month low, according to a Bloomberg News survey. U.S. stockpiles probably fell 1.73 million barrels in the seven days ended July 23 from 353.5 million the week earlier, according to analysts surveyed by Bloomberg.

The Petroleum Institute 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 demand rose 1.7 percent last week, as U.S. motorists bought an average 9.51 million barrels a day of the motor fuel in the week ended July 23, according to MasterCard Inc.’s SpendingPulse report yesterday. The gain was the second in a row and the sixth in seven weeks.

Oil touched $79.69 a barrel in intraday trading yesterday, the highest level since May 6, as global equities gained before the consumer confidence report.

Estimates for consumer confidence ranged from 46 to 55.5 in the Bloomberg survey of 73 economists after a previously reported 52.9 reading in June. The Conference Board measure averaged 98 during the expansion that ended in December 2007.

Brent crude for September settlement fell 28 cents, or 0.4 percent, to $75.85 a barrel on London’s ICE Futures Europe exchange at 10:25 a.m. Sydney time. Yesterday the contract fell $1.37, or 1.8 percent, to settle at $76.13.