Oil traded near its highest level in two weeks in New York before a report forecast to show that crude inventories declined last week in the U.S., the world’s largest energy user. Futures pared losses of 0.4 percent as European equity markets advanced for a seventh day and the U.S. dollar gave up earlier gains versus the euro. The Energy Department will probably report that inventories fell 1.5 million barrels last week, a Bloomberg News survey of 14 analysts shows. “While fundamentals in Europe and the U.S. remain problematic, the oil price in the last 24 hours has defied gravity,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The steady stock market and continued belief in strong growth in emerging economies are both helping. Oil for August delivery traded for $77.11 a barrel, 4 cents lower in electronic trading on the New York Mercantile Exchange as of 8:51 a.m. London time, having dropped as much as 34 cents to $76.81 a barrel. Yesterday, the contract jumped $2.20, or 2.9 percent, to $77.15, the highest level since June 28. Brent crude for August settlement was 2 cents higher at $76.67 on the London-based ICE Futures Europe exchange. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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