Oil fell for a second day, heading for the biggest monthly drop in more than three years, before a report that may show stockpiles climbed to the highest level since 1990 in the U.S., the world’s biggest crude user. Futures slid as much as 1.3 percent. U.S. inventories rose 800,000 barrels to 383.3 million last week, according to the median estimate of eight analysts in a Bloomberg News survey before the Energy Department report tomorrow. Economic confidence in the euro area fell more than forecast, a European Commission report today showed. Prices dropped yesterday after BNP Paribas SA reduced its 2012 forecast for West Texas Intermediate oil. “We’re seeing a temporary, seasonal demand-side weakness with very ample supplies,� said Andy Sommer, a senior trader at EGL AG in Dietikon, Switzerland, who correctly predicted last month that prices would fall. “The European impact on global oil demand is not that big� and prices will rebound in the second half as the economy recovers, he said. Crude for July delivery decreased as much as $1.21 to $89.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.63 at 10:22 a.m. London time. The contract yesterday slid 10 cents to $90.76, the lowest close since May 24. Prices are down 15 percent this month, the biggest drop since December 2008. Brent oil for July settlement fell $1.20, or 1.1 percent, to $105.48 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.84, compared with $15.92 yesterday. Fuel Supplies Oil in New York has long-term technical support at $89.83 a barrel, according to data compiled by Bloomberg. On the weekly chart, that’s the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from an intraday record high of $147.27 in July that year. Buy orders tend to be clustered near chart-support levels. “Demand out of the U.S. and the euro zone has been very soft,� David Lennox, an analyst at Fat Prophets in Sydney, said in a telephone interview. “For the foreseeable future, barring any supply-side shocks, oil will stay around $90 a barrel. If there’s going to be any movement, it’s not likely to be up.� U.S. gasoline stockpiles probably fell 250,000 barrels last week, according to the Bloomberg survey before tomorrow’s Energy Department report. Distillate supplies, a category that includes heating oil and diesel, will likely remain unchanged at 119.5 million barrels, the survey shows. Gasoline Pump Prices The American Petroleum Institute will release separate inventory data today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. U.S. gasoline at the pump fell below year-earlier levels for the sixth straight week, the Energy Department said in a weekly retail report yesterday. The national average price for regular gasoline dropped 4.5 cents to $3.669 a gallon from a week earlier, it said. BNP Paribas cut its 2012 price forecast for New York crude by $7 to $100 a barrel, and its estimates for Brent by $4 to $115 a barrel, as Europe’s debt crisis worsened, according to an e-mailed report. Prices will still advance in the third quarter because of sanctions against Iran and shrinking spare production capacity in the Organization of Petroleum Exporting Countries, the bank said. Economic confidence in the euro area declined in May to the lowest since October 2009. An index of executive and consumer sentiment in the 17-nation euro area fell to 90.6 from a revised 92.9 in April, the European Commission in Brussels said today. That’s below the 91.9 forecast by economists, according to the median of 28 estimates in a Bloomberg News survey. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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