By Grant Smith April 27 (Bloomberg) -- Oil fell for a second day before a report forecast to show that U.S. crude supplies increased last week, as demand lags behind the recovery in the world’s largest energy user. U.S. crude inventories probably climbed 1 million barrels last week, according to analysts surveyed before tomorrow’s Energy Department report. Oil prices in New York are trading at their biggest discount to London contracts since August amid mounting stockpiles at the U.S. delivery point in Oklahoma. A report from the U.S. Conference Board today may show consumer sentiment improved for a second month. “Anticipation of further stock builds is putting pressure on the market today, and the equity market isn’t lending its usual helping hand,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Still, a positive set of consumer confidence figures could change all of this.” Crude oil for June delivery fell as much as $1.14, or 1.4 percent, to $83.06 a barrel in electronic trading on the New York Mercantile Exchange, and was at $83.23 at 1:29 p.m. London time. Brent crude for June settlement was down 68 cents at $86.15 on the London-based ICE Futures Europe exchange. Crude prices also slid today in tandem with equity indexes in Europe and Asia, while a stronger dollar curtailed the appeal of commodities for hedging against inflation. The U.S. currency rose to $1.3294 per euro from $1.3382 in New York yesterday. ‘Ticking Time Bomb’ Oil dropped 1.1 percent yesterday as the dollar advanced on concern the Greek bailout plan faces hurdles and as credit default swaps in Portugal, Western Europe’s poorest country, show investors rank its debt as the world’s eighth-riskiest. “It’s like a ticking time bomb in Europe,” said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. “At some point they can’t keep pumping in cash. That will really cripple the recovery and affect oil.” The New York-based Conference Board’s sentiment index is due at 10 a.m. local time. The gauge probably rose to 53.5 from 52.5 in March, according to the survey median. Estimates ranged from 48 to 57, and the measure averaged 98 during the economic expansion that ended in December 2007. Tomorrow’s U.S. Energy Department data will probably show gasoline inventories climbed 500,000 barrels from 225 million the prior week, according to analyst estimates in a Bloomberg News survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, were estimated to have risen 1.25 million barrels. Refinery operating rates were probably unchanged last week after five weeks of gains, the survey shows. The industry-funded American Petroleum Institute releases its own supply data at 4:30 p.m. in Washington D.C. today. “We’re yet to see significant recovery in demand,” Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney, said in a telephone interview. “Looking at the trend, it doesn’t suggest that U.S. oil demand is recovering rapidly.” To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

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