Oil fell below $90 a barrel as a report showed U.S. stockpiles rose for a third week and on concern the worsening European crisis will reduce demand.
Prices dropped to a seven-week low after the American Petroleum Institute said supplies increased 335,000 barrels last week. Analysts polled by Bloomberg forecast a gain of 1.9 million barrels when the Energy Department releases its data today. Spain’s economy is falling at a “significant pace,” the Bank of Spain said today.
“The API report was bearish and it added downward pressure on oil,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The concerns about Spain are taking hold here.”
Crude for November delivery fell 92 cents, or 1 percent, to $90.45 a barrel at 9:22 a.m. on the New York Mercantile Exchange. The price reached $89.82, the lowest intraday level since Aug. 3. The futures are down 8.5 percent this year.
Brent oil for November settlement dropped $1.06, or 1 percent, to $109.39 a barrel on the London-based ICE Futures Europe exchange.
U.S. crude stockpiles rose to 361.8 million barrels last week, the highest since the week ended Aug. 24, the industry- funded API said.
Gasoline supplies gained 112,000 barrels, the API said. Distillate inventories, a category that includes heating oil and diesel, fell 483,000 barrels compared with a forecast gain of 500,000.
The Energy Department will release its weekly petroleum data at 10:30 a.m. in Washington. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for the Energy Department’s weekly survey.
Spain’s 10-year benchmark bond yield rose above 6 percent, approaching the levels seen before European Central Bank President Mario Draghi offered to buy struggling nations’ debt. Prime Minister Mariano Rajoy told the Wall Street Journal in comments confirmed by his office that he would “100 percent” seek a rescue if borrowing costs stayed “too high.”
“Renewed worries, especially in Spain, are putting the focus back onto global growth and the potential for subdued demand for oil,” Ole Hansen, senior manager of trading advisory at Saxo Bank A/S, said by phone from Copenhagen.
Oil demand in Organization of Economic Cooperation and Development countries will fall by 0.7 percent this year to 46.2 million barrels a day, led by a 2.6 percent drop in Europe “due to sluggish economic growth,” the International Energy Agency said on Sept. 12.
The euro fell as much as 0.5 percent against the dollar. A weaker euro and stronger dollar reduce oil’s appeal as an investment alternative.