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Oil Falls For First Day In Three As U.S. Stockpiles Increase

By on July 26, 2012

Oil dropped for the first time in three days in New York on concern that rising stockpiles signal faltering demand in the U.S., the world’s biggest crude consumer.

Futures slid as much as 0.7 percent, erasing a 0.5 percent gain yesterday. Crude inventoriesclimbed by 2.7 million barrels last week, the first increase in five weeks, data from the Energy Department showed. Supplies were forecast to decline 1 million barrels, according to a Bloomberg News survey. Sales of new U.S. homes unexpectedly decreased in June from a two-year high, a Commerce Department report showed.

“We’re stuck in the $80s until we get a little more confidence around global growth prospects,”Michael McCarthy, a chief market strategist at CMC Markets in Sydney, said in a phone interview. “I would expect, especially given the inventory numbers, oil to gravitate back toward the middle of the $81.50 to $88.50 range over the next few trading days.”

Crude for September delivery fell as much as 59 cents to $88.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.60 at 2:54 p.m. Singapore time. The contract yesterday rose 47 cents to $88.97, the highest close since July 20. Prices are 10 percent lower this year.

Brent oil for September settlement on the London-based ICE Futures Europe exchange slid as much as 59 cents, or 0.6 percent, to $103.79 a barrel. The European benchmark crude was at a $15.39 premium to New York contracts. The spread closed at $15.41 yesterday, the widest in seven weeks.