Oil fell after an industry-funded report showed an increase in U.S. crude and gasoline stockpiles, signaling a recovery in fuel demand may falter. Oil extended losses as European stocks declined for the first time in five days. The American Petroleum Institute report showed crude supplies increased 5.87 million barrels and gasoline inventories rose 2.03 million barrels last week. An Energy Department report today may show crude stockpiles dropped 1 million barrels, according to a Bloomberg News survey. “We have fears that the U.S. will again go into recession, and that worldwide economic activity will slow down,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “Supplies of crude-oil and gasoline are at very, very high levels compared to normal seasonal levels.” Crude for September delivery dropped as much as 73 cents, or 1 percent, to $75.04 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.22 at 10:31 a.m. London time. Brent crude for October settlement dropped 56 cents, or 0.7 percent, to $76.37 a barrel on the London-based ICE Futures Europe Exchange. The October Nymex contract slipped below its Brent equivalent three days ago for the first time since May 21, and was last at a discount of 73 cents. The New York benchmark is normally more expensive because of its higher quality and the extra cost of shipping Brent-priced crudes from overseas. Longer-Dated Spreads The discount on New York crude for delivery in 2012 compared with North Sea Brent may disappear as the government restricts drilling after the worst oil spill in U.S. history. With near-term deliveries of West Texas Intermediate regaining their premium as stockpiles diminish, history suggests that longer-dated futures will follow, according to Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. The October 2012 WTI contract on the Nymex has closed below its London equivalent on every day except two since April 6, with the discount averaging 62 cents during the period. It traded today at 94 cents a barrel below Brent. The benchmark Stoxx Europe 600 Index dropped 0.8 percent to 256.4 at 9:11 a.m. in London. “The fact that crude oil and gasoline is building, that’s definitely not good,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “We’ve got a ways to go before people are confident about the U.S. economy.” The Energy Department report may show U.S. gasoline supplies declined 375,000 barrels last week, according to the Bloomberg News survey. The report is scheduled to be released at 10:30 a.m. in Washington 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. To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

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