By Grant Smith May 19 (Bloomberg) -- Crude oil, slumped to its weakest level in seven months on concern gasoline demand is slowing in the U.S. and speculation the European debt crisis will worsen. Oil dropped for a seventh day, its longest losing streak in five months after the euro touched a four-year low earlier today as European nations struggled to meet austerity requirements. An American Petroleum Institute report showed gasoline inventories in the world’s biggest energy consumer rose 981,000 barrels last week. The Energy Department will release its data later today. “The commodity complex has seen a healthy correction, driven by risk aversion and currency market jitters,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Near-term fundamentals are bearish, with an inventory overhang in the U.S. and things not much rosier in Europe, but we’re getting close to support levels.” Crude oil for June delivery dropped as much as $1.51, or 2.2 percent, to $67.90 a barrel in electronic trading on the New York Mercantile Exchange, the lowest level since Sept. 30. It was at $68.52 at 1:18 p.m. in London. Brent crude oil for July delivery dropped 68 cents to $73.75 on the London-based ICE Futures Europe exchange. The euro dropped to as low as $1.2144, the weakest since April 17, 2006, as Germany’s ban on speculative sales triggered concern that Europe’s debt crisis will worsen. The single currency retraced its losses to $1.2248 as of 1:19 p.m. The June contract on the Nymex, which expires tomorrow, fell 67 cents yesterday to $69.41 a barrel, the lowest settlement since Sept. 29. Today, the more actively traded July future fell 74 cents to $71.96 a barrel. Crude Supplies The Organization of Petroleum Exporting Countries is “tense” about the decline in oil prices and may call an extraordinary meeting if the fall continues, Angolan Oil Minister Jose Maria Botelho de Vasconcelos said yesterday. An Energy Department report today will probably show that U.S. inventories of crude oil climbed for the 15th time in 16 weeks. Stockpiles rose 500,000 barrels in the seven days ended May 14 from 362.5 million the week before, according to the median of 15 analyst estimates in a Bloomberg News survey. Supplies of distillate fuel, a category that includes heating oil and diesel, climbed 1 million barrels from 153.8 million, according to the survey. Gasoline stockpiles declined 900,000 barrels from 222.1 million the prior week. Crude supplies declined 794,000 barrels last week, the American Petroleum Institute report said yesterday. “The trend is still down for the price of oil,” said Mike Sander, an investment adviser a Sander Capital Advisors in Seattle. “As long as the euro continues to sink like a rock, the price of oil will remain on the defensive. The June contract saw oil break through support at the $70 barrel level and we could see oil hit $67.” The Petroleum Institute 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. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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