Oil declined for a third day in New York on speculation that Europe’s spreading debt crisis will curb demand for raw materials and that U.S. fuel stockpiles increased last week. Futures fell as much as 1.7 percent as soaring yields on Italian bonds heightened concern Europe’s third-largest economy won’t be able to finance its debt. U.S. gasoline supplies probably grew for the first time in four weeks, according to a Bloomberg News survey before a government report tomorrow. Oil briefly fell below its 200-day moving average, a technical support level. “Contagion fears about Italy, Portugal and Ireland are going to dominate for the time being,” Myrto Sokou, a London- based analyst at Sucden Financial Ltd., said. “Investors should be very cautious about all the uncertainty in the euro zone,” which will probably cause crude to drop, she said. Crude for August delivery fell as much as $1.60 to $93.55 a barrel in electronic trading on the New York Mercantile Exchange, and was at $94.57 at 1:40 p.m. London time. The contract yesterday lost $1.05 to $95.15, the lowest settlement since July 1. Prices have risen 26 percent in the past year. New York futures fell less than London’s Brent crude, narrowing the gap between the benchmark contracts to $21.69 a barrel from $22.09 at settlement yesterday. Brent oil for August settlement lost as much as $2.29, or 2 percent, to $114.95 a barrel on the ICE Futures Europe exchange in London. Risk Aversion “Crude is joining in on the selloff,” Andrey Kryuchenkov, an analyst at VTB Capital in London said today by e-mail. “The euro is down yet again, with equities selling off as risk aversion continues to haunt global markets on fears for peripheral debt in the euro zone.” An Energy Department report tomorrow may show U.S. gasoline supplies increased for the first time in four weeks, according to the median of 10 analyst estimates in a Bloomberg News survey. They probably climbed 500,000 barrels last week from 212.5 million, the survey shows. Crude stockpiles dropped 2.3 million barrels, the Bloomberg survey shows. That would be the sixth week of declines. The industry-funded American Petroleum Institute will report its own supply data today. OPEC Report The Organization of Petroleum Exporting Countries forecast world oil demand will grow at a slower pace for a second year in 2012 as consumption declines in Europe and slows in other industrialized nations. Global demand will average 89.5 million barrels a day in 2012, the group’s Vienna-based secretariat said today in its monthly report, giving its first forecast for next year. That’s up 1.3 million barrels, or 1.5 percent, from the 2011 estimate. Inventories of distillate fuel, a category that includes heating oil and diesel, probably rose 800,000 barrels, according to the survey. Nine of the analysts anticipated a gain and one forecast a decline. Oil may extend declines if it settles below its 200-day moving average, currently at $93.76 a barrel, according to data compiled by Bloomberg. Moving averages are used by investors to determine levels of support and resistance and predict price direction when those levels are crossed. New York crude slumped 11 percent in the second quarter on speculation Europe’s debt crisis will stall the region’s economic recovery. Italian bonds fell for a seventh day and the nation’s borrowing costs jumped by more than half at an auction of 6.75 billion euros ($9.4 billion) of bills today. Stocks pared declines after falling to a two-year low. The rout in Italy underscored Europe’s inability to contain the crisis that began in Greece in 2009 and led to bailouts in Ireland and Portugal. “Global debts seem to be hanging over the market like the Sword of Damocles,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in an e-mailed note today. Italy faces 175 billion euros in debt maturities this year and has 1.6 trillion euros of bonds outstanding, the world’s third-largest debt pile, after the U.S. and Japan. To contact the reporter on this story: Lananh Nguyen in London at lnguyen35@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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