Oil fell from a three-month high after U.S. inventories posted a larger-than-expected gain and Japanese refiners processed less crude. U.S. oil stockpiles increased 4.66 million barrels to 349.9 million barrels last week, the most in almost two years, the Washington-based American Petroleum Institute said in a report after the close of trading yesterday. Japanese refiners operated plants at 78.4 percent of capacity last week, down 3.8 percentage points from the week before, according to data released today by the Petroleum Association of Japan. “Without a substantial recovery in the U.S. economy, crude prices won’t gain momentum to lift them to as high as $60 a barrel,” said Masahiko Sato, a senior analyst at OvalNext Corp. in Tokyo. “Clearly, languishing petroleum demand in Japan led refiners to cutting back on plant operations.” Crude oil for April delivery fell as much as 84 cents, or 1.7 percent, to $48.32 a barrel on the New York Mercantile Exchange, and traded at $48.66 at 1:43 p.m. Tokyo time. Yesterday, April futures rose 3.8 percent to $49.16 a barrel, the highest settlement since Dec. 1. Prices have gained 8.4 percent so far this year. In Japan, refiners led by Nippon Oil Corp., plan to shut down more capacity during the peak spring maintenance season this year, lowering crude oil requirements in the world’s third- biggest user. The move comes after 2008 domestic gasoline sales fell 4.2 percent, the most since 1952. Japan Refining Cuts Japanese refiners will halt 1.2 million barrels a day in the second half of June, 25 percent of the country’s refining capacity and up from the 14 percent idled a year earlier. “The U.S. economy is taking a longer-than-expected period of time to recover,” said Ken Hasegawa, a commodity derivative sales manager at Newedge in Tokyo. “Fewer signs are emerging that auto-fuel demand has been stimulated.” Futures rose yesterday on an unexpected rebound in homebuilding and speculation that the Federal Reserve will outline plans to bolster the U.S. economy. The Commerce Department report showed that work began on 583,000 homes at an annual rate, a 22 percent increase from January. Oil prices have plunged from a record $147.27 a barrel in July as the U.S., Europe and Japan face recessions. Gasoline and heating-oil futures prices surged, with the motor fuel reaching the highest in four months. ‘Hit Bottom’ “There’s a feeling that maybe the economy has hit the bottom,” said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $9 billion natural-resource-company bond portfolio. “For the first time in a while we aren’t looking at mostly negative headlines.” The unexpected gain in housing starts and speculation about Fed policy also pushed U.S. equities higher. The Standard & Poor’s 500 Index climbed 3.2 percent to 778.12 yesterday. The Dow Jones Industrial Average rose 2.5 percent to 7,395.78. An Energy Department report today is forecast to show that U.S. crude oil inventories gained 1.5 million barrels last week, according to the median of 14 analyst estimates in a Bloomberg News survey. The department is scheduled to release its weekly report today at 10:30 a.m. in Washington. Gasoline stockpiles probably dropped 1.5 million barrels from 212.5 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1 million barrels from 145.4 million, the survey showed. Brent crude oil for May settlement fell as much as 84 cents, or 1.7 percent, to $47.40 a barrel on London’s ICE Futures Europe exchange, and traded at $47.55 at 12:42 p.m. Singapore time.

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