Oil advanced on speculation that the Federal Reserve may announce new measures to stimulate the economy, and after U.S. crude inventories declined. Federal Reserve Chairman Ben S. Bernanke may outline steps to bolster the world’s largest economy during a speech tomorrow. Crude inventories fell for a second week last week, slipping by about 2 million barrels, U.S. government data showed yesterday. Standard Chartered Plc reduced its oil-price forecasts before a report that may show U.S. growth slowed in the second quarter. “Everyone’s sitting back and waiting to see what Bernanke has to say,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney who predicts crude will average $100 a barrel this year. Crude for October delivery was at $85.74 a barrel in electronic trading on the New York Mercantile Exchange, up 0.7 percent at 8:43 a.m. London time. Yesterday, the contract lost 28 cents to $85.16, the lowest close since Aug. 22. Prices have gained 17 percent from a year ago. Brent oil for October settlement on the London-based ICE Futures Europe exchange traded at $111.12 a barrel, up 97 cents. The European benchmark contract was at a premium of $25.38 to U.S. futures, down from a record $26.21 on Aug. 19. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

Source