By Grant Smith and Yee Kai Pin April 6 (Bloomberg) -- Crude oil fell from its highest level in 17 months before a report forecast to show that crude inventories grew for a 10th week in the U.S., the world’s largest energy consumer. U.S. gasoline stockpiles probably dropped 1.9 million barrels last week, while inventories of crude oil climbed 1 million barrels, according to a Bloomberg survey before tomorrow’s Energy Department report. Oil rose 2.1 percent yesterday to $86.62 a barrel, the highest close since Oct. 8, 2008, as growth in U.S. service industries signaled the economy is recovering from the worst recession since the 1930s. “The market’s pausing for breath after such a big move- up,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “With the recovery still at a fragile stage, and U.S. inventories ample, we’re unlikely to see prices surging to $100.” Crude oil for May delivery was at $86.35 a barrel, down 27 cents, in electronic trading on the New York Mercantile Exchange at 10:59 a.m. London time after falling as low as $86.13. Brent crude for May settlement was down 24 cents at $85.64 on London’s ICE Futures Europe exchange. New York futures have gained 8.8 percent this year. U.S. service industries expanded in March at the fastest pace since May 2006, indicating the country’s recovery may be spreading beyond manufacturing and starting to create jobs. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, rose to 55.4 from 53 in the prior month. This exceeded the median forecast of 54 in a Bloomberg News survey of economists. ‘Encouraging Data’ “We’ve seen some encouraging economic data the last few days,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “It’s keeping the global recovery story in place. Overall, we are expecting global oil demand growth to be positive this year.” The Energy Department will release its Weekly Petroleum Status Report tomorrow at 10:30 a.m. in Washington. It’s also due to put out its monthly Short-Term Energy Outlook today. U.S. gasoline stockpiles probably dropped 1.9 million barrels from 224.9 million the prior week, according to the median estimate from seven analysts polled by Bloomberg News. Distillate fuel supplies, including heating oil and diesel, fell 1.5 million barrels from 144.6 million. Commercially held crude oil inventories are expected to have climbed 1 million barrels, increasing for a 10th week, the longest stretch of gains since late 2004, the survey showed. Stockpiles previously reached 354.2 million barrels, 6.5 percent above the five-year average. To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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