May 30 (Bloomberg) -- 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 3.2 percent and Brent oil traded in London settled below $104 a barrel for the first time this year. An Energy Department report tomorrow will 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 $2.94 to $87.82 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 21. Prices have decreased 16 percent this month, heading for the biggest drop since December 2008.
Brent oil for July settlement declined $3.21, or 3 percent, to end the session at $103.47 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since Dec. 16.
Saudi Arabian Oil Minister Ali al-Naimi said on May 13 in Adelaide, Australia, that he wanted to see the Brent crude contract drop to $100 a barrel.
“Ali al-Naimi has said he wants Brent at $100 and we’re rapidly approaching that level,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “It’s not necessarily a floor. We may overshoot to the downside, like we did to the upside earlier.”
U.S. crude inventories climbed in the previous nine reports from the Energy Department. Fuel supplies dropped and demand slipped 1.7 percent in last week’s report.
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 Energy Department is scheduled to release its report at 11 a.m. tomorrow.