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Business Title: Oil Tumbles to Seven-Month Low on U.S. Supply Glut Oil tumbled to a seven-month low on speculation that U.S. crude stockpiles climbed to the highest level since 1990 and as the euro weakened on concern that the debt crisis will overwhelm Spain. New York futures fell as much as 3.6 percent and Brent oil traded in London dropped below $104 a barrel for the first time this year. An Energy Department report tomorrow is projected to show that U.S. supplies rose 1 million barrels to 383.5 million last week, according to analysts surveyed by Bloomberg. The euro fell versus the dollar as Spain’s default risk increased. “We’re looking at a build of another million barrels to a 22-year high,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Given how high inventories are and how weak the economy looks, no wonder we’re trading lower. We’re going to probably continue seeing dollar strength, which will keep the pressure on oil.” Oil for July delivery fell $2.82, or 3.1 percent, to $87.94 a barrel at 11:17 a.m. on the New York Mercantile Exchange. Futures reached $87.49, the lowest intraday level since Oct. 24. Prices are down 16 percent this month, the biggest drop since December 2008. Brent oil for July settlement declined $2.94, or 2.8 percent, to $103.74 a barrel on the London-based ICE Futures Europe exchange. The contract touched $103.23, the lowest level since Dec. 19. Fuel Inventories U.S. gasoline stockpiles probably fell 1 million barrels last week, according to the median of 11 analyst estimates in the Bloomberg survey. Supplies of distillate fuel, a category that includes heating oil and diesel, are projected to be unchanged, the survey shows. The American Petroleum Institute will release separate inventory data today. 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. The euro touched $1.2386, the lowest level against the dollar since July 1, 2010. A weaker euro and stronger dollar curb commodities’ appeal as an alternate investment. The Standard & Poor’s GSCI Index of 24 commodities decreased as much as 2.5 percent and touched the lowest level since Oct. 7. The Standard & Poor’s 500 Index dropped 1.2 percent and the Dow Jones Industrial Average was down 1 percent. Financial Factors “We’re looking at the same financial factors that have been moving the oil market,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Equities are getting killed, the euro is getting killed and the pessimism about Europe only seems to deepen.” Europe needs to take steps to help “debt sustainability,” Spanish Prime Minister Mariano Rajoy said today. Italy’s borrowing costs rose as the government sold 5.73 billion euros ($7.1 billion) of five- and 10-year debt, falling short of the maximum target of 6.25 billion euros. Economic confidence in the euro area declined in May to the lowest level since October 2009. An index of executive and consumer sentiment in the 17-nation euro area fell to 90.6 from a revised 92.9 in April, the European Commission in Brussels said today. The drop in prices accelerated after a report showed the number of Americans signing contracts to buy previously owned homes fell in April by the most in a year. The index of pending home resales dropped 5.5 percent following a revised 3.8 percent gain the prior month, figures from the National Association of Realtors showed today in Washington.
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