Brent crude oil halted a five-day advance after rallying to a 31-month high yesterday, on speculation that rising fuel prices may dent demand in China and the U.S., the world’s biggest crude users. The European benchmark climbed to $123.37 a barrel yesterday, the highest settlement since Aug. 1, 2008. China’s National Development and Reform Commission said gasoline and diesel retail prices will increase today because of global crude costs. The world’s second-biggest economy raised interest rates for the fourth time since October this week to cool inflation. U.S. oil inventories climbed for a fifth week to 357.7 million barrels, according to an Energy Department report yesterday. “We have some signs of the negative impact of high prices on demand in the last weeks, and I would expect more numbers in that direction in coming weeks,” said Andy Sommer, a senior analyst at EGL AG in Dietikon, Switzerland. “The market is too high right now. If there are no additional supply outages I expect a downward correction.” Brent oil for May settlement fell 21 cents, or 0.2 percent, to $122.09 a barrel on the London-based ICE Futures Europe exchange as of 12:01 p.m. London time. Crude for May delivery on the New York Mercantile Exchange was at $108.89 a barrel, up 6 cents, after slipping as much as 60 cents to $108.23 a barrel. Brent Resistance Brent prices may rally further after surpassing a key resistance level at $119 a barrel, said Serene Lim, an energy and commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Once it breaches that, the next level is $149 a barrel,” she said. The European benchmark traded at a premium of $13.20 to U.S. futures. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and stockpiles climbed at Cushing, Oklahoma, the delivery point for New York futures. The spread averaged 76 cents last year. China raised the ceiling for gasoline prices by 500 yuan ($76) a metric ton and for diesel prices by 400 yuan. The cost of No. 3 jet fuel gained by 500 yuan to 6,840 yuan a ton, according to the country’s top economic planner. Prices also dropped after the Bank of Japan cut its assessment of the economy, the world’s third-largest energy user, following the nation’s record earthquake on March 11. U.S. crude advanced 10 percent in March as fighting in Libya cut exports from Africa’s third-largest producer. Rebels aiming to end Muammar Qaddafi’s 42-year rule and forces loyal to the Libyan leader waged battles between the Qaddafi stronghold of Sirte and the rebel-held city of Ajdabiyah. Libya Premium “The Libyan situation has been priced in” to the oil price, said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “We haven’t seen further signs of contagion and as a result prices seem relatively comfortable around this range.” The conflict is the bloodiest in uprisings that have toppled the presidents of Tunisia and Egypt and spread to Bahrain, Iran, Yemen and Oman. Nigerian output may decline after the presidential election takes place on April 16, according to Barclays Capital. That would curb supplies of the light, low-sulfur grades that have been curtailed because of fighting in Libya. More than 50 people have died in election-related violence since July, according to Amnesty International, while sectarian clashes in the north have claimed the lives of at least 200 since Dec. 24. Total U.S. crude inventories climbed 1.95 million barrels, the Energy Department report showed. A 2 million-barrel gain was projected, according to the median estimate of 15 analysts in a Bloomberg News survey. Supplies at Cushing slipped 16,000 barrels to 41.9 million in the week ended April 1. Stockpiles in the previous week were at the highest level since the government began keeping records in 2004. U.S. gasoline inventories fell 357,000 barrels to 216.7 million last week, the Energy Department said. They were forecast to drop by 1.9 million barrels, the survey showed. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 195,000 barrels to 153.5 million. To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; 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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