Crude oil futures extended their declines after a U.S. government report showed an increase in inventories.
Supplies rose 950,000 barrels to 355 million in the week ended July 29, the Energy Department said today in a weekly report. Inventories were forecast to increase by 1.5 million barrels, according to the median of 14 analyst estimates in a Bloomberg News survey.
Crude oil for September delivery dropped $1.91, or 2%, to $91.88 U.S. a barrel late Wednesday on the New York Mercantile Exchange.
Oil traded at $92.55 U.S. before the release of the report at 10:30 a.m. in Washington.
Oil also declined on concern that a slowing U.S. economy will curb fuel demand in the world’s biggest oil consuming country. Futures dropped as much as 2.2% after a report yesterday showed U.S. consumer spending fell and the government agreed to cut spending. Moody’s Investors Service said the nation’s credit rating may be cut.
U.S. consumer spending fell 0.2% in June, Commerce Department figures showed yesterday. The median estimate of 77 economists surveyed by Bloomberg News called for a 0.1% increase. Incomes grew at the slowest pace since November.
The U.S., rated AAA since 1917, was placed on negative outlook, New York-based Moody’s said in a statement as it confirmed the rating. Moody’s warned on July 29 a negative outlook was "more likely" as lawmakers reduced the size of spending cuts being negotiated to win approval on a plan to lift the nation’s borrowing limit.
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