Oil tumbled to the lowest level in more than a week after the U.S. Energy Department reported an unexpected increase in inventories. Crude inventories climbed by 7.31 million barrels, or 2.1 percent, to 360.8 million in the seven days ended July 23, the biggest one-week increase since March 19. Inventories were forecast to drop to a four-month low, based on the median estimate of 16 analysts surveyed by Bloomberg News. “This is huge, and it’s knocking prices down,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “It’s only adding to an environment in which we saw a drop in consumer confidence yesterday. We also recently saw oil reach the top of its range. You put all these things together, and it looks like oil will be going to the low $70s.” Crude oil for September delivery fell 96 cents, or 1.2 percent, to $76.54 a barrel at 11:24 a.m. on the New York Mercantile Exchange. Oil traded at $76.76 before the release of the report at 10:30 a.m. in Washington. It touched $75.90, the lowest level since July 20, after the report. Inventories were forecast to drop 1.73 million barrels, according to the Bloomberg survey. Oil supplies rose by 3.08 million barrels, or 0.9 percent, to 356.3 million, according to a report yesterday by the industry-funded American Petroleum Institute. “People are nervous that the economy is going to mean weaker demand and that is going to see us later this year with excessive inventories,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There has long been hope that recovering demand would reduce the inventories we have now, and that hope is slowly fading.” Durable Goods Oil also fell after total orders for durable goods, those meant to last at least three years, unexpectedly dropped 1 percent amid a decrease in demand for aircraft. The Commerce Department report deepened concern that the economic recovery may be flagging and limiting fuel demand. Economists forecast total durable goods orders would climb 1 percent, according to the median of 76 projections in a Bloomberg News survey. The Commerce Department revised May orders to show a 0.8 percent drop compared with a previously reported decrease of 0.6 percent. U.S. consumer confidence fell to the lowest level in five months in July, shaken by mounting concern over jobs and wages, the Conference Board reported yesterday. The U.S. is the world’s second-largest energy consumer after China. Brent crude for September settlement on the London-based ICE Futures Europe lost 67 cents, or 0.9 percent, to $75.46 a barrel. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

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