Crude oil rose for a second day as U.S. inventories tumbled and on speculation that European leaders will agree on steps to address the region’s debt crisis. Futures climbed as much 1.6 percent after the industry- funded American Petroleum Institute said yesterday that supplies fell the most in six weeks. An Energy Department report today may show stockpiles dropped for a seventh week, the longest stretch of declines in two years. European officials meet in Brussels tomorrow to break a deadlock over a new Greek rescue. “The API report last night was fairly bullish, with a crude-oil supply drop that was much larger than any expectations I’ve seen,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “There’s optimism that an agreement will come out of tomorrow’s EU summit, will be enough to calm fears about the debt crisis.” Crude oil for August delivery increased $1.47, or 1.5 percent, to $98.97 a barrel at 9:05 a.m. on the New York Mercantile Exchange. The August contract expires today. The more-actively traded September future advanced $1.44, or 1.5 percent, to $99.30. Brent oil for September settlement rose $1.58, or 1.4 percent, to $118.64 a barrel on the London-based ICE Futures Europe exchange. U.S. crude oil supplies declined 5.2 million barrels to 354.2 million last week, according to the American Petroleum Institute. A Bloomberg News survey shows that the Energy Department report may show stockpiles fell 2 million barrels last week, according to the median of 15 analyst responses. Report Methodologies 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. “There’s still some hope we’ll see some kind of solution regarding the European debt crisis,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “And we saw a stock draw in the API numbers, which pulls crude higher. All in all, sentiment is more positive but not strongly bullish.” European officials are considering steps previously rejected by Germany, including the use of precautionary credit lines, to prevent the spread of the region’s debt crisis, a person close to the talks said. Other options up for discussion include enabling the main 440 billion euro ($626 billion) rescue fund to lend to recapitalize banks, said the person, who declined to be named because negotiations are in progress. Together with a second Greek aid package, the goal is to prove to markets that Europe has the will and the tools to prevent the 21-month sovereign debt crisis from engulfing Spain and Italy. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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