Oil dropped for a second day after an industry report showed U.S. fuel stockpiles rose last week and the Federal Reserve said the recovery in the world’s biggest crude user has been “disappointingly slow.” Futures fell as much as 0.9 percent after the U.S. central bank said it would maintain a stimulus plan because the economic recovery was insufficient. Heating oil stockpiles climbed to the highest since the week ending Oct. 29 while gasoline inventories built for a third week, the industry-funded American Petroleum Institute said yesterday. The Energy Department will report its own stockpile data today. “The U.S. economy is not doing as well as it should be and the plan reiterates the concern that the Fed and the government have,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. Fuel stockpiles are “building into a market that already has excess supply,” he said. The January contract fell as much as 75 cents to $87.53 a barrel in electronic trading on the New York Mercantile Exchange. It was at $87.84 at 1:48 p.m. in Singapore after dropping 0.4 percent yesterday. Prices are up 10.8 percent this year. Futures also declined as a strengthening dollar limited the appeal of commodities. The U.S. currency rose against all except two of its 16 major peers and was 0.2 percent higher versus the euro. Stockpile Reports The American Petroleum Institute yesterday reported that crude inventories fell 1.44 million barrels. The Energy Department’s report, scheduled to be released at 10:30 a.m. in Washington today, will probably show gasoline supplies increased 2 million barrels in the week ended Dec. 10, according to the median of 17 analyst responses in a Bloomberg News survey. Crude oil supplies probably dropped 2.5 million barrels. Analysts were split over whether stockpiles of distillate fuel rose or fell. U.S. gasoline demand at the pump slid 2.7 percent last week as retail prices rose to the highest level in 25 months, according to data in a MasterCard Inc. SpendingPulse report. Fuel demand was 1.3 percent below the same period a year earlier, MasterCard said. That’s the largest drop in year-over- year consumption since Oct. 29. Brent crude for January settlement dropped as much as 52 cents, or 0.6 percent, to $90.69 a barrel on the ICE Futures exchange in London. The January future expires tomorrow. The more actively traded February contact fell as much as 48 cents, or 0.5 percent, to $90.02 a barrel. To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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