By Grant Smith Dec. 4 (Bloomberg) -- Crude oil fell for a third day before a report forecast to show unemployment at a 26-year high in the U.S., the world’s biggest energy user. Oil traded near $76 a barrel after data showing that service industries in the U.S. unexpectedly contracted last month spurred speculation that the country may report more job losses than forecast later today. U.S. crude inventories are at their highest level since August, according to the Energy Department. “At the moment demand is slacking while stocks are abundant, so in the near-term the outlook is bearish,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Fundamentals fail to justify gains beyond $80. Today, everything is stalling ahead of the all-important U.S. non-farm payrolls.” Crude oil for January delivery fell as much as 89 cents, or 1.2 percent, to $75.57 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.89 at 11:08 a.m. London time. Futures, which lost 54 percent in 2008, have gained 70 percent this year. The Labor Department may say in a report today that U.S. employers dropped 125,000 non-farm workers from their payrolls, according to the median of forecasts from 81 economists surveyed by Bloomberg News. The jobless rate may have remained at 10.2 percent, a Bloomberg survey showed. Commercially held U.S. crude oil inventories rose 2.09 million barrels to 339.9 million, the highest level since August, an Energy Department report showed on Dec. 2. Weaker ISM Index The Institute for Supply Management’s index of non- manufacturing businesses that make up almost 90 percent of the economy slipped to 48.7 from 50.6 in October, the Tempe, Arizona-based group said yesterday. “The ISM non-manufacturing index reading was weaker than expected and that raised some investor anxiety ahead of the employment report,” said Toby Hassall, a research analyst with CWA Global Markets Pty in Sydney. “Policy makers have indicated they see the recovery as being very uneven, and I expect the unemployment rate to stay elevated for an extended period.” Brent crude oil for January settlement fell as much as 82 cents, or 1.1 percent, to $77.54 a barrel on the London-based ICE Futures Europe exchange. The contract traded at $78.04 a barrel at 11:10 a.m. in London. Oil may decline next week on speculation fuel inventories are sufficient to meet weakening demand, a Bloomberg News survey showed. Twenty-one of 41 analysts and traders, or 51 percent, said futures will drop through Dec. 11. Five respondents, or 12 percent, forecast the market will rise, and 15 said prices will be little changed. Last week, 37 percent of survey respondents said oil would climb. -- With assistance from Yee Kai Pin in Singapore. Editors: John Buckley, Mike Anderson. To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

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