Oil Declines in New York Amid Signs of Higher U.S. Supply

Crude oil in New York slipped from the highest close in a week amid signs that supplies are increasing in the U.S., the world’s largest consumer.

West Texas Intermediate futures dropped as much as 0.7 percent. Crude inventories rose 2.78 million barrels last week to 367.1 million, the American Petroleum Institute said yesterday. This contrasts with forecasts for Energy Department data due later today. The department may report that stockpiles fell by 1.5 million barrels, according to a Bloomberg News survey. North Sea Brent traded at a premium of more than $20 a barrel to WTI for a fourth day.

“High inventories, high imports, anemic demand” are weighing on WTI, said Eugen Weinberg, head of commodities research in Frankfurt at Commerzbank AG, who predicts U.S. crude may slide further.

Oil for September delivery traded at $93.11, down 32 cents, on the New York Mercantile Exchange at 12:39 p.m. London time. It earlier dropped to $92.77. The contract advanced 70 cents yesterday to $93.43, the highest settlement since Aug. 7. Prices are down 6 percent this year.

Brent crude for September settlement, which expires tomorrow, was at $113.70 a barrel, down 33 cents, on the London- based ICE Futures Europe exchange. It rose 43 cents yesterday to $114.03. The more-active October contract slipped 16 cents to $111.99 a barrel.

The European benchmark contract’s premium to New York futures was at $20.64, compared with a close of $20.60 yesterday.

U.S. Supply

U.S. crude supply rose as imports increased for a second week, gaining 5.3 percent to 9.4 million barrels a day, the highest since the week of July 20, the API data showed.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines and its weekly report is published after futures prices settle each Tuesday. The government requires that reports be filed with the Energy Department for its weekly survey, which is due at 10:30 a.m. in Washington.

Today’s Energy Department report may show stockpiles decreased by 1.5 million barrels, or 0.4 percent, to 368.4 million in the seven days ended Aug. 10, according to the median of 10 analyst estimates. That would be the least since April 6. All 10 respondents forecast a decline in the Bloomberg survey, speculating that tropical storm weather in the Gulf of Mexico reduced imports at a time when U.S. refinery utilization held near a five-year high.

Israeli Gas Masks

Tension with Iran over its nuclear program may still be solved with diplomacy, U.S. Defense Secretary Leon Panetta said yesterday. The Persian Gulf nation is the third-largest oil producer in the Organization of Petroleum Exporting Countries.

The “window is still open” for diplomacy, Panetta said yesterday following comments earlier this month from Israeli officials that time has almost run out to avert military strikes. The U.S., concerned that a conflict could destabilize the Middle East and send oil prices higher, has been urging Israel to exercise caution.

Dozens of Israelis crowded in front of a storefront at a Jerusalem shopping mall yesterday to pick up new gas masks, part of civil defense preparations in case the military strikes Iran and the Islamic Republic or its allies retaliate.

Average U.S. gasoline pump prices were at a 12-week high as of Aug. 13 after climbing 11 percent in the previous six weeks, according to AAA, the nation’s largest motoring organization.

The biggest two-week gain in 17 months could turn fuel costs into a battleground again for President Barack Obama and Republican Mitt Romney in the Nov. 6 election, according to Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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