Bloomberg Oil Extends Decline After Unexpected Gasoline Supply Increase

Oct. 28 (Bloomberg) -- Crude oil futures extended declines after a U.S. government report showed an unexpected increase in supplies of gasoline.

Gasoline inventories climbed 1.62 million barrels to 208.6 million in the week ended Oct. 23, the Energy Department said today in a weekly report. Stockpiles were forecast to decline by 1 million barrels, according to the median of 17 analyst estimates in a Bloomberg News survey.

Inventories of crude oil rose 778,000 barrels to 339.9 million, the department said. Supplies were forecast to increase by 1.91 million barrels.

Crude oil for December delivery fell $1.44, or 1.8 percent, to $78.11 a barrel at 10:35 a.m. on the New York Mercantile Exchange.

Oil traded at $78.61 a barrel before the release of the report at 10:30 a.m. in Washington.

Oil also dropped as the MSCI World Index fell for a seventh straight day, the longest losing streak since January.

“The stock market appears to have hit a ceiling and that raises questions about whether the oil market has as well,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “If the stock market drops, oil is vulnerable because it’s risen more than is justified by the fundamentals.”

The Organization of Petroleum Exporting Countries will raise oil output if there’s a “real” shortage of supply, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said yesterday in Ras Laffan, Qatar. The 12-member group is scheduled to meet Dec. 22 in Luanda, Angola, to review production targets.

To contact the reporter on this story: Mark Shenk in New York at