Oil fell for the first time in three days in New York on concern that China will boost interest rates to tame inflation and on signs that U.S. crude supplies are increasing. Gasoline dropped as much as 4.7 percent on speculation that a 9 percent rally in the past two days was excessive. The fuel had advanced on concern that flooding on the Mississippi River will disrupt U.S. supplies. Yesterday the industry-funded American Petroleum Institute said crude inventories jumped last week. The Energy Department will release its data today. Consumer price rises in China exceeded the government’s target last month, data from the statistics bureau in Beijing showed. “The API report took the wind out of the market’s sails,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The latest U.S. demand data has been weaker than normal for the time of year, but the fact prices have not fallen further is a sign of strength, and we could see Brent return to $120.” Crude for June delivery declined as much as $1.62, or 1.6 percent, to $102.26 a barrel on the New York Mercantile Exchange and was at $102.27 at 1:22 p.m. London time. Yesterday the contract rose 1.3 percent to settle at $103.88, the highest since May 4. Prices are up 34 percent in the past year. Brent crude for June settlement on the London-based ICE Futures Europe exchange was $1.02 lower at $116.61 a barrel. Yesterday, it gained 1.5 percent to $117.63, the highest settlement since May 4. North Sea Brent crude’s premium to U.S. benchmark West Texas Intermediate widened for a fourth day. The spread between the two front-month contracts increased to $14.34 a barrel from $13.75 at settlement yesterday, according to data compiled by Bloomberg. OPEC Report The Organization of Petroleum Exporting Countries said oil prices are more in line with market conditions after last week’s 14.7 percent collapse, and maintained its 2011 demand forecast. The world will need an average of 29.87 million barrels of crude a day from OPEC’s 12 members this year, about 400,000 a day more than last year because of “roaring” economic growth in China, the group said in its monthly market report today. China’s consumer prices climbed 5.3 percent in April from a year earlier, according to the statistics bureau in Beijing. That’s higher than the government’s 4 percent full-year target and above the 5.2 percent median forecast in a Bloomberg News survey of economists. The country’s central bank will increase interest rates once more this year, adding to four since mid-October, another Bloomberg News survey showed. Officials have boosted banks’ reserve requirements and reined in credit growth from record levels in 2009 and 2010. U.S. crude stockpiles climbed 2.95 million barrels last week to 367.2 million, the API said. The Energy Department’s weekly report, scheduled for release at 10:30 a.m. in Washington may show supplies rose 1.5 million barrels, based on the Bloomberg News survey. To contact the reporters on this story: 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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