Oil fell, heading for the biggest decline in a week, as speculation that global supplies are sufficient prompted investors to sell contracts after yesterday’s rally to a 31-month high. Futures slid as much as 1 percent before a report that may show U.S. supplies rose for the seventh time in eight weeks. Saudi Arabia is not comfortable with prices and is committed to keeping aside a “sizable cushion” of spare capacity, Saudi Aramco Chief Executive Officer Khalid al-Falih said in Seoul today. Oil also dropped as the Dollar Index strengthened, reducing the appeal of commodities priced in the U.S. currency. “Commodities are getting overvalued so people are taking profits at these levels,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “People are mainly looking at the currency markets for direction.” Oil for June delivery fell as much as $1.16 to $111.12 a barrel in electronic trading on the New York Mercantile Exchange, the most since a $2.54 tumble on April 18. The contract was at $111.55 at 2:43 p.m. Singapore time. Yesterday, it traded at $113.48, the highest since Sept. 22, 2008. Brent crude for June settlement on the London-based ICE Futures Europe exchange declined as much as 88 cents, or 0.7 percent, to $122.78 a barrel. The contract yesterday decreased 0.3 percent to $123.66. Doji Formation A technical indicator showed oil is reversing gains. New York futures yesterday settled 6 cents below the opening price, the narrowest gap in a month, creating a so-called doji formation on the daily candlestick chart. This means the current trend will end. The Dollar Index, a measure of the greenback against six major currencies, gained 0.3 percent today, the first increase in six days. The index has declined 6.1 percent this year amid demand for safer assets as violence in Syria heightened concern unrest in the Middle East will spread. Saudi Arabia is committed to maintaining 3 million to 4 million barrels a day of idle capacity, al-Falih said in Seoul. The world’s largest oil exporter last month pumped 9 million barrels a day, the fastest rate since October 2008, according to a Bloomberg News survey of producers and analysts. “We are not comfortable with oil prices where they are today,” al-Falih said. “Given recent events in some parts of the Middle East, Saudi Arabia’s additional capacity has been critical in reassuring consumers of uninterrupted supplies.” U.S. Supplies Brent traded at a premium of $11.75 a barrel to New York futures settling in the same month. The difference has shrunk $1.30 from a week earlier after supplies fell at Cushing, Oklahoma, the delivery point for U.S. contracts. Stockpiles at Cushing dropped 770,000 barrels to 41.1 million in the week ended April 15, according to the Energy Department. Crude stockpiles nationwide fell 2.32 million barrels to 357 million, the first drop since February. U.S. crude inventories climbed 1.5 million barrels last week, according to the median estimate of seven analysts surveyed by Bloomberg News before a government report tomorrow. The industry-funded American Petroleum Institute will publish its own data today. U.S. gasoline supplies probably dropped 1 million barrels in the period ended April 21, the survey showed. Distillate fuel supplies, including diesel and heating oil, were estimated to have increased by 600,000 barrels. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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