By Grant Smith Jan. 22 (Bloomberg) -- Crude oil fell for a third day, dipping below $76 a barrel in New York to its lowest in a month, after a U.S. government report showed refineries in the biggest energy consumer cut processing in response to lower fuel demand. U.S. refineries ran at 78.4 percent of capacity last week, the lowest rate outside the Atlantic hurricane season since at least 1989, according to the Energy Department. Oil is headed for a second weekly drop after U.S. President Barack Obama proposed restrictions on risk-taking at financial institutions while concerns grew that China may take more steps to curb price increases. “We have high inventories whether you look at crude or gasoline or distillates, despite the cold weather,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “The news from China is not so good. There’s fear that the economy is getting too hot. We’re seeing some risk aversion.” Crude oil for March delivery declined as much as 46 cents, or 0.6 percent, to $75.62 a barrel, the lowest level since Dec. 23. It was at $75.88 in electronic trading on the New York Mercantile Exchange, 20 cents lower, at 1:18 p.m. London time. Futures have dropped 2.7 percent this week as declines in equity markets dented investor confidence and a stronger dollar reduced the investment appeal of commodities, including gold. “The market would be pretty concerned with refinery rates,” said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “It’s flagging weaker demand and also that supplies are ample.” Processing Rates U.S. refining rates dropped 2.9 percent in the week to Jan. 15, the most since October, according to the Energy Department. A decline of 0.5 percent was expected by analysts, based on the median of estimates in a Bloomberg News survey. Gasoline inventories rose for a third week to their highest level since March 2008, the department’s Weekly Petroleum Status Report showed. Fuel consumption in the past four weeks dropped 1.8 percent from a year earlier. Stockpiles of the motor fuel climbed 3.95 million barrels, the most since November, to 227.4 million. “From a fundamental point of view, the market is oversupplied,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “After two days’ decline, the market will try testing its lower side around $75.” China’s 10.7 percent growth in the fourth quarter ignited concerns that the nations responsible for leading the world out of a recession will raise borrowing costs to keep their economies from overheating. Further Decline Crude oil may fall next week as U.S. fuel consumption declines and refineries idle units, a Bloomberg News survey showed. Eighteen of 42 analysts and traders, or 43 percent, said oil will drop through Jan. 29. Sixteen respondents, or 38 percent, forecast an increase and eight said prices will be little changed. Last week, 42 percent of analysts predicted a decline in futures. Brent crude oil for March settlement was at $74.46 a barrel on the London-based ICE Futures Europe exchange, 12 cents lower, at 1:18 p.m. London time. Yesterday, the contract declined 2.3 percent to $74.58, the lowest settlement since Dec. 22. To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

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