Oil Drops in New York on Speculation Demand Will Falter as Supplies Rise

Oil fell in New York as investors speculated that demand will falter amid increasing U.S. crude stockpiles in the world’s biggest consumer of the commodity. Brent oil’s premium to the U.S. contract widened.

Futures slipped as much as 0.7 percent after the American Petroleum Institute said supplies rose 2.57 million barrels last week. An Energy Department report today is forecast to show they fell 1.3 million barrels. The International Monetary Fund cut its estimates for economic growth in the U.S. and China, the world’s second-biggest crude user.

“API data were mixed-to-negative in our opinion,” Tom Pawlicki, a Chicago-based analyst at MF Global Holdings Ltd., said in a note today. “Energy prices are expected to trade in a mixed-to-lower direction in the near-term.”

Crude for November delivery slipped as much as 60 cents to $86.32 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.36 at 11:42 a.m. Sydney time. The contract yesterday advanced $1.11, or 1.3 percent, to $86.92. Prices are 18 percent higher the past year.

Brent oil for November settlement fell 43 cents, or 0.4 percent, to $110.11 a barrel on the London-based ICE Futures Europe Exchange. The European benchmark contract’s premium to U.S. futures widened to $23.75 after closing at $23.62 yesterday. The difference settled at a record $26.87 on Sept. 6.

U.S. Stockpiles

U.S. gasoline stockpiles climbed 62,000 barrels last week, the American Petroleum Institute data showed. The Energy Department report will probably show inventories increased 1.35 million barrels, according to the median of 16 analyst estimates in the Bloomberg News survey.

The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

The IMF said yesterday that the U.S. economy will expand 1.5 percent this year, down from 2.5 percent projected in June. The Washington-based lender cut its forecast for China’s growth to 9.5 percent from 9.6 percent. The nation’s 2012 outlook was lowered to 9 percent from 9.5 percent.

Brent’s premium to New York oil has widened amid disruptions to production. The first North Sea Forties crude cargo for October loading was deferred and a third September shipment was delayed to next month, according to a revised export program obtained by Bloomberg News. Forties is one of four North Sea crude grades used to price Dated Brent, the benchmark for more than half of the world’s oil.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net