By Mark Shenk Nov. 25 (Bloomberg) -- Crude oil fell on speculation that a U.S. Energy Department report will show that inventories climbed for a ninth week as demand declined. A report tomorrow will probably show that supplies rose 1.1 million barrels last week, according to a Bloomberg News survey. Fuel demand during the four weeks ended Nov. 14 was down 7 percent from a year earlier, the department said last week. Oil rose more than $4 a barrel yesterday, following equities higher. “We are gearing up for tomorrow’s report and most people expect it to show another inventory build,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “What the market does this week will hinge on how big a build we get in the report.” Crude oil for January delivery declined $1.85, or 3.4 percent, to $52.65 a barrel at 10:06 a.m. on the New York Mercantile Exchange. Futures have dropped 64 percent since reaching a record $147.27 on July 11. Prices surged yesterday after the government gave Citigroup Inc., the second-biggest U.S. bank by assets, $306 billion of loan guarantees over the weekend. “It looks like the market had a one-day rally yesterday because of the Citibank bailout,” McGillian said. “We were also overdue for a rebound because of how much futures dropped in recent weeks.” The U.S. economy shrank in the third quarter faster than previously estimated as consumer spending fell the most in almost three decades. Gross domestic product contracted at a 0.5 percent annual pace over the period, the most since the 2001 recession, the Commerce Department reported today. The U.S. consumes 24 percent of the world’s oil. OPEC Meeting Oil ministers from the 13-nation Organization of Petroleum Exporting Countries are scheduled to meet on Nov. 29 in Cairo. Slowing global demand growth has left a 1 million-barrel-a-day oversupply that needs to be removed by the end of the year, Venezuela’s oil minister, Rafael Ramirez, said on Nov. 23. OPEC will hold another summit on Dec. 17 in Algeria. “OPEC has some power to control prices but nowhere near what they would like,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. “They will have to weigh their options carefully. There is a risk that they could cut production too much.” Russia may coordinate oil production cuts with OPEC as the world’s second-largest crude exporter reels from falling energy prices. The country can’t rule out cutting output together with OPEC, Energy Minister Sergei Shmatko said at a conference in New Delhi today. Brent crude oil for January settlement dropped $1.24, or 2.3 percent, to $52.69 a barrel on London’s ICE Futures Europe exchange. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

Source