Oil fell in London on speculation the U.S. may face a credit-rating downgrade and that European leaders won’t be able to contain the region’s financial crisis. Brent crude fell as much as 0.9 percent, halting a two-day rally, after Moody’s Investors Service put the U.S. rating under review as talks to raise its $14.3 trillion debt limit stalled, while concern grew that the European crisis is spreading. West Texas Intermediate oil gained in New York after a report yesterday showed U.S. inventories declined. “Persistent worries about the euro zone’s economic stability continue to weigh heavily on Brent,” said Myrto Sokou, a London-based analyst at Sucden Financial Ltd. “WTI crude oil is getting some support from the weaker U.S. dollar.” Brent for August settlement fell as much as 0.9 percent to $117.73 a barrel and was at $118.40 at 10:25 a.m. on the ICE Futures Europe exchange in London. The August contract expires today. The more actively traded September futures were down 43 cents at $117.42 a barrel. Oil for August delivery on the New York Mercantile Exchange was at $98.53 a barrel, up 48 cents. The contract yesterday rose 62 cents to $98.05, the highest close since July 7. Front-month Brent, the European benchmark, traded at a premium of $19.87 a barrel to U.S. futures, compared with a record close of $22.29 on June 15. Moody’s put the U.S. on review for the first time since 1995 as talks to raise the country’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to default. The American government has held its Aaa credit rating with Moody’s since 1917. Gold Rallies “With the failure of the U.S. government to solve the debt ceiling issue and Moody’s warning of a credit rating downgrade, uncertainty levels are high,” David Wech, head of research at Vienna-based researcher JBC Energy GmbH, said in a note today. Gold rallied to a record after Moody’s announced the credit review and U.S. debt-ceiling talks stalled. Immediate-delivery bullion climbed as much as 0.5 percent to an all-time high of $1,589.80 an ounce. The Energy Department said yesterday U.S. crude stockpiles declined 3.1 million barrels last week to 355.5 million. Supplies were projected to drop 1.5 million barrels, according to a Bloomberg News survey. The industry-funded American Petroleum Institute said in a separate report on July 12 that inventories rose 2.34 million barrels. Gasoline Demand The country’s gasoline demand slumped 293,000 barrels last week to 9.02 million barrels a day, the Energy Department said. That’s the lowest since the week of May 6. Overall U.S. oil consumption averaged 18.9 million barrels daily in the period to July 8, down 1.4 percent from the same time a year ago. Gasoline supplies fell 840,000 barrels to 211.7 million last week, the report showed. A 500,000-barrel gain was projected, according to the survey. Distillate inventories, a category which includes heating oil and diesel, rose 2.97 million barrels to 145 million, compared with a median forecast for a 500,000-barrel increase. BP Plc said its Valhall and Hod platforms off Norway remained shut after a fire at Valhall earlier this week. Valhall was producing about 60,000 barrels a day before the closure and Hod a “few thousand barrels,” Jan Erik Geirmo, a BP spokesman in Norway, said in a phone interview. The outage may support Brent crude prices today because it adds to the “current supply shortage premium from the region,” ANZ’s Natalie Robertson said. 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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