Oil Falls the Most in Three Months After Unexpected Supply Gain

[Purveyor]

By Mark Shenk

July 29 (Bloomberg) -- Crude oil fell the most in three months after a government report showed an unexpected gain in U.S. inventories as imports jumped and refiners reduced operating rates.

Stockpiles surged 5.15 million barrels to 347.8 million in the week ended July 24, the Energy Department said. It was the biggest weekly increase since April. Supplies were forecast to decline by 1.5 million barrels, according to the median of analyst estimates in a Bloomberg News survey.

“The main problem with this market is the fact that there’s too much oil out there,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “We may test $60 before the week is over as these numbers are absorbed.”

Crude oil for September delivery fell $3.97, or 5.9 percent, to $63.26 a barrel at 11:20 a.m. on the New York Mercantile Exchange. Prices are poised for the biggest one-day decline since April 20. Futures are up 42 percent this year and have dropped 57 percent from a record $147.27 reached on July 11, 2008.

Oil traded at $65.12 a barrel before the release of the report at 10:30 a.m. in Washington.

The inventory increase left crude-oil stockpiles 9.5 percent higher than the five-year average for the period, according to the Energy Department.

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRZ58Eq24_ek

[jpak]

1. Gee, regulators declare that excessive speculation gave us $147 barrel oil , hint at new regulation

and the speculators exit stage left...

[asjr]

2. The oil was always there--just too many greedy

oil magnates.