Crude oil dropped in New York after CME Group Inc. raised margins and on speculation U.S. stockpiles increased to near the highest level in two years. Oil fell as much as 2.4 percent after the exchange late yesterday increased the amount of money traders must hold as collateral for their crude, gasoline and heating oil transactions, effective after the close of business today. The Energy Department will probably report tomorrow that supplies rose last week, according to a Bloomberg News survey. “The market tumbled hard on news that the CME was raising margins,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re up from the day’s lows because of strength in the equity markets.” Crude for June delivery slipped $1.32, or 1.3 percent, to $101.23 a barrel at 9:29 a.m. on the New York Mercantile Exchange. Futures climbed 5.5 percent to $102.55 yesterday, the biggest gain since Feb. 22. Last week oil dropped the most since December 2008. CME Group, the Nymex owner, increased margins for crude trading to $8,438 per contract from $6,750, effective after the close of business today. Heating-oil margins will rise to $8,438 from $6,413, and gasoline will climb to $9,450 from $7,763. The Stoxx Europe 600 Index increased 0.9 percent at 8:30 a.m. in New York. Standard & Poor’s 500 Index futures advanced 0.5 percent. Rising Supplies U.S. crude stockpiles increased 1.5 million barrels from 366.5 million in the week ended May 6, according to the median of 15 estimates from analysts surveyed by Bloomberg News. That would leave supplies within 1 percent of a two-year high. The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute will publish its own data today. U.S. gasoline inventories are expected to have declined 500,000 barrels from 204.5 million, the survey showed. Gasoline futures advanced, extending the biggest one-day gain in almost two years, amid concern that the flooding of the Mississippi River will disrupt fuel production and distribution. Futures rose as much as 3 percent as the rising waters threaten refineries and shipping. A total of 11 plants, accounting for 13 percent of U.S. fuel output, are located between New Orleans and Baton Rouge, according to Lipow Oil Associates LLC in Houston. “Gasoline is up because of the potential for the Mississippi to flood refineries,” Armstrong said. “This reminds me of when prices rise ahead of a hurricane because of the potential for damage. Prices often sell-off strongly after the storm passes with minimal damage.” Brent crude for June settlement slipped 96 cents, or 0.8 percent, to $114.94 a barrel on the London-based ICE Futures Europe exchange. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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