Oil dropped from a three-day high in New York as concern Europe’s debt crisis will threaten the region’s economic recovery, curbing fuel demand, countered signs of rising crude consumption in the U.S. Futures slid as much as 0.7 percent today, after the biggest gain in almost a month yesterday, as European Union finance ministers struggled to break a deadlock on a second rescue plan for the Greek economy. U.S. crude stockpiles fell 3.01 million barrels last week, the industry-funded American Petroleum Institute said yesterday. Government data today may show a decline of 1.8 million barrels. “Although weekly data may show a decrease in stockpiles, supplies are generally high in the U.S.,” said Ken Hasegawa, a commodity derivative sales manager at Newedge, a broker in Tokyo. The outlook for the U.S. and European economies is still weak, he said. Crude for July delivery declined as much as 70 cents to $98.67 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.69 at 2:50 p.m. Singapore time. The contract gained $2.07, or 2.1 percent, to $99.37 yesterday in the biggest percentage increase since May 18. Prices are 28 percent higher the past year. European Meetings The discount for New York futures to Brent traded in London was $21.20 a barrel, compared with a record $21.80 on June 13. Brent oil for July delivery slid 35 cents, or 0.3 percent, to $119.81 a barrel on the London-based ICE Futures Europe exchange. The contract expires today. The more actively traded August future fell 47 cents to $118.88. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet on June 17 in Berlin to try to resolve their differences on a rescue for Greece, which was downgraded this week to the world’s lowest credit rating by Standard & Poor’s. EU finance ministers agreed to convene again on June 19. The global economy has “hit a bit of a short-term patch of weakness but we still see the second half of the year as being pretty strong,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted crude will average $113 a barrel in the third quarter. “Higher oil prices might be having a marginal impact on growth in the advanced economies.” U.S. Crude Stockpiles The Energy Department report today will say U.S. crude inventories fell from 368.9 million last week, according to a Bloomberg News survey of 13 analysts. Gasoline supplies probably rose 1.05 million barrels, the survey shows. Crude stockpiles dropped to 363 million barrels, the lowest in seven weeks, according to the American Petroleum Institute report yesterday. Gasoline inventories climbed 1.13 million barrels to 213.5 million barrels, the API said. Oil-supply totals from the API and the Energy Department have moved in the same direction 72 percent of the time over the past year. The institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey. The cancellation of some supplies of U.K. Forties crude for June loading and ongoing turmoil in Libya boosted Brent’s value relative to WTI, Newedge’s Hasegawa said. The North Atlantic Treaty Organization dropped leaflets across Libyan government lines around the besieged rebel-held city of Misrata, threatening attacks by Apache helicopters if the daily bombardment of the enclave continues. Oil Flows “Some Forties crude for June loading were rolled over to July and in Libya supplies are still suspended.” Hasegawa said. “I would want to watch if Brent goes up to $123 a barrel because it will try to reach $127 if that happens.” The gap is widening because of flows of light, sweet crude to Europe and Asia instead of the U.S. Gulf Coast, Goldman Sachs Group Inc. said in a note yesterday. The premium is “primarily driven by the weakening of U.S. Gulf Coast light-sweet crude oil prices relative to Brent crude, not a Cushing bottleneck,” Goldman analysts including New York-based David Greely said. In the past the gap was determined by excessive stockpiles at the U.S. storage hub in Cushing, Oklahoma, the latest divergence is more linked to shortages of blends similar to Brent crude, BNP Paribas SA said yesterday in a separate report. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

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