Crude oil dropped to a five-week low on concern that a faltering economy will curb demand in the U.S., the world’s leading consumer. Futures fell 2 percent after a report showed service industries expanded in July at the slowest pace since February 2010. Stocks fell and Treasuries rose on the economic outlook. The decline accelerated after the Energy Department said crude supplies climbed 950,000 barrels to 355 million last week. “The main driver is the economy,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “If the U.S. economy is slowing, the easiest path for oil is lower. We’ll soon be testing support just below $90.” Crude oil for September delivery dropped $1.86 to settle at $91.93 a barrel on the New York Mercantile Exchange, the lowest settlement since June 27. Prices have climbed 11 percent in the past year. Brent oil for September settlement declined $3.23, or 2.8 percent, to end the session at $113.23 a barrel on the London- based ICE Futures Europe exchange. It was the biggest drop since June 23, when the International Energy Agency announced its members were offering 60 million barrels of oil from emergency stockpiles to damp prices. The European benchmark traded at a $21.30 premium to oil traded in New York, down from a record $22.67 yesterday based on closing prices. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, dropped to 52.7 from 53.3 in June. Readings above 50 signal expansion, and economists projected 53.5 for July, according to the median forecast in a Bloomberg News survey. AAA Rating Executives from firms that advise the Treasury Department, including JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), said yesterday that a cut in the U.S. credit rating isn’t imminent, according to minutes of their meeting. The department released the minutes today. Moody’s Investors Service said the U.S. credit rating may be cut. The nation, rated AAA since 1917, was placed on negative outlook, New York-based Moody’s said in a statement as it confirmed the rating. It warned on July 29 that 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. “The outlook for the economy is negative and there are still worries about a possible downgrade,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “The debt ceiling agreement is just the beginning, there’s a lot more that will have to be done.” Debt Limit President Barack Obama signed a bill to raise the U.S. debt limit by at least $2.1 trillion, averting by hours a first-ever U.S. financial default, amid signs of a slowing economy and continued debt problems in Europe. U.S. gross domestic product climbed at a 1.3 percent annual rate last quarter after expanding 0.4 percent in the first three months of 2011, the worst performance since the start of the recovery in June 2009, the Commerce Department said on July 29. “We’ve had four months of poor economic headlines,” said Stephen Schork, president of the Villanova, Pennsylvania-based Schork Group Inc. “The revision of the first-quarter GDP last week to just 0.4 percent shows that there is basically no growth. The specter of a double-dip recession is growing.” U.S. crude oil inventories were forecast to increase by 1.5 million barrels, according to the median of 14 analyst estimates in a Bloomberg News survey. ‘Negative Numbers’ Gasoline inventories rose 1.7 million barrels to 215.2 million last week, the highest level since April 1. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 409,000 barrels to 152.3 million. Consumption of gasoline slipped 0.3 percent to 9.07 million barrels in the four weeks ended July 29, down 3.6 percent from the same period a year earlier, the report showed. “We’ve seen a spate of negative numbers from the U.S. and these large budget cuts may only make it worse,” said Torbjoern Kjus, a senior analyst at DnB NOR ASA (DNBNOR) in Oslo. “Demand is looking very poor in the U.S. and that’s weighing on the market. We haven’t really had a driving season this summer, or rather it’s been much weaker than last year.” Oil volume in electronic trading on the Nymex was 606,666 contracts as of 3:19 p.m. in New York. Volume totaled 616,720 contracts yesterday, 8.5 percent below the average of the past three months. Open interest was 1.53 million contracts. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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