Oil dropped

Oil dropped after a government report showed that U.S. crude inventories unexpectedly increased last week.

West Texas Intermediate fell as much as 3.6 percent in New York. Stockpiles climbed 7.27 million barrels to 387.2 million in the week ended Dec. 19, the Energy Information Administration said. The report was projected to show a 2.5 million-barrel decline, according to the median estimate in a Bloomberg survey of nine analysts.

Futures surged yesterday after Commerce Department data showed that the U.S. gross domestic product rose at a 5 percent annual rate from July through September, the most since 2003. Oil is heading for the biggest annual drop since 2008 amid a global glut exacerbated by the highest U.S. output in more than three decades. Prices have dropped about 20 percent since the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain its output ceiling at 30 million barrels a day.

WTI for February delivery fell $1.80 to $55.32 a barrel at 10:31 a.m. on the New York Mercantile Exchange. The contract traded at $55.56 before the release of the report at 10:30 a.m. in Washington.

Brent for February settlement dropped $2.16, or 3.5 percent, to $59.53 a barrel on the London-based ICE Futures Europe exchange.