Oil tumbles as supplies gain, U.S. output surges to 13-year high

July 25 (Bloomberg) -- Oil declined after an Energy Department report showed U.S. stockpiles unexpectedly climbed as production surged to the highest level in 13 years.

Futures fell as much as 1.8 percent after the department said supplies rose 2.72 million barrels to 380.1 million last week. A 1 million-barrel decrease was projected, according to analysts surveyed by Bloomberg. U.S. crude output advanced 1.9 percent to 6.36 million, the highest level since February 1999.

“The surprise crude build was very bearish,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Production climbed to a new high. There was a surge in imports, more than outpacing the increase in refinery runs.”

Crude oil for September delivery declined $1.28, or 1.4 percent, to $87.22 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures touched $86.84, the lowest level since July 16. Oil traded at $88.48 a barrel before release of the inventory report at 10:30 a.m.

Brent oil for September settlement fell 84 cents, or 0.8 percent, to $102.58 a barrel on the London-based ICE Futures Europe exchange.

Crude imports rose 696,000 barrels a day to 9.63 million in the seven days ended July 20, the highest rate since March, according to the department.

Refineries operated at 93 percent of capacity, the highest rate since July 2007. Analysts projected that the report would show a 0.1 percentage point decline in utilization to 91.9 percent.

Gasoline Supply

Gasoline inventories gained 4.13 million barrels to 210 million last week, the biggest increase in 2012. They were forecast to decline 1 million barrels, according to the median of 11 responses in the Bloomberg survey.

Gasoline for August delivery dropped 8.07 cents, or 2.9 percent, to $2.7441 a gallon on the Nymex. Earlier, it touched $2.7298, the lowest level since July 10.

Futures also fell after demand for new U.S. homes unexpectedly dropped in June from a two-year high, indicating the housing recovery will be uneven.

Purchases decreased to a 350,000 annual rate, down 8.4 percent from the prior month and the weakest since January, the Commerce Department reported today in Washington. The median estimate in a Bloomberg survey of 74 economists was 372,000. The decline was led by a record 60 percent plunge in the Northeast.

The U.K. economy shrank the most since 2009 in the second quarter and more than economists forecast, increasing pressure on Prime Minister David Cameron to abandon Britain’s biggest budget squeeze since World War II.

Gross domestic product fell 0.7 percent from the first quarter, when it dropped 0.3 percent, the Office for National Statistics said in London today. Economists forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg survey.

Bloomberg News

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