Oil advanced for a second day in New York as investors bet that shrinking stockpiles and signs of economic recovery in the U.S. indicate fuel demand will increase in the world’s biggest crude-consuming nation. Futures gained as much as 0.9 percent after the industry- funded American Petroleum Institute said supplies fell the most in six weeks. An Energy Department report today may show inventories dropped for a seventh week, the longest run of declines in two years. Prices rose yesterday after U.S. housing starts surged more than economists forecast. “We continue to see stock draws,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $113 a barrel in the third quarter. “Crude supplies are still relatively high compared with history but it’s undoubtedly positive for oil prices.” Crude for August delivery increased as much as 85 cents to $98.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.33 at 1:07 p.m. Sydney time. The contract, which expires today, rose $1.57 to $97.50 yesterday. Prices are 27 percent higher the past year. The more-actively traded September future gained 79 cents to $98.65. Brent oil for September settlement advanced as much as 94 cents, or 0.8 percent, to $118 a barrel on the ICE Futures Europe exchange in London. The contract yesterday gained $1.01, or 0.9 percent, to $117.06. U.S. Stockpiles U.S. crude oil supplies declined 5.2 million barrels to 354.2 million, the biggest drop since the week ended June 3, according to the American Petroleum Institute. The Energy Department report may show stockpiles fell 2 million barrels last week, according to a Bloomberg News survey. Inventories are about 4 percent above the average of the past five years, according to Energy Department data. Gasoline supplies increased 1.96 million barrels to 210.3 million, the American Petroleum Institute said. It was the first increase in five weeks. The Energy Department report may show stockpiles fell 250,000 barrels, the Bloomberg survey shows. The American Petroleum 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. In the past four years, the indicators have moved the same direction 75 percent of the time for oil. Homes, Storms Work began on 629,000 houses in the U.S. at an annual pace in June, up 15 percent from May and the fastest pace in five months, figures from the Commerce Department showed yesterday in Washington. Reports today will show sales of existing homes also increased, according to economists surveyed by Bloomberg. Tropical Storm Dora strengthened in the eastern Pacific and is forecast to become a hurricane, while Bret weakened in the Atlantic on a course out to sea, the U.S. National Hurricane Center said. Dora, 295 miles (475 kilometers) south of Acapulco, Mexico, had sustained winds of 70 miles per hour as of 5 p.m. East Coast time, the Miami-based center said in an advisory. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

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