Oil was little changed near its highest in a week in London 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 in a speech tomorrow. Crude inventories fell for a second week last week, slipping by about 2 million barrels, U.S. government data showed yesterday. Saudi Arabia may cut production if a resumption of Libyan exports pushes the price of Brent crude down toward $90 a barrel, according to the Centre for Global Energy Studies. “Risk aversion has decreased and that’s helped oil,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna and the fifth most-accurate forecast of Brent prices in the eight quarters to June. “The strength of Brent is a bit of a surprise. We should see substantial Libyan volumes come back by the middle of next year.” Brent oil for October settlement on the London-based ICE Futures Europe exchange gained as much as $1.05 a barrel, or 1 percent, to $111.20. It was at $110.29 a barrel at 11:24 a.m. London time. The European benchmark contract was at a premium of $24.90 to U.S. futures, down from a record $26.21 on Aug. 19. On the New York Mercantile Exchange, crude for October delivery was at $85.39 a barrel, up 23 cents. Yesterday, the contract lost 28 cents to $85.16, the lowest close since Aug. 22. Prices have gained 18 percent from a year ago. U.S. Stockpiles U.S. crude inventories decreased 0.6 percent to 351.8 million barrels in the week ended Aug. 19, according to the Energy Department. Supplies were forecast to increase 1.75 million barrels, based on the median estimate from analyst surveyed by Bloomberg News. Gasoline supplies climbed 1.36 million barrels to 211.4 million, as imports rose and refineries boosted processing rates to the highest in five weeks, the report showed. Libya, holder of Africa’s largest crude reserves, will probably restore production to about 300,000 barrels a day over the next two to three months and then to 500,000 a day by the end of the year, Julian Lee, senior energy analyst, said yesterday in a telephone interview. Saudi Arabia has boosted supplies this year by about 1 million barrels a day partly in response to the suspension of exports from Libya. Price Forecasts Cut Standard Chartered Plc reduced its third-quarter oil-price forecasts on “weaker than expected” demand in the U.S. and speculation that supply disruptions in the North Sea and West Africa will end. Brent may average $112 a barrel, down from an earlier estimate of $115, London-based analyst Helen Henton said in a report yesterday. New York crude may average $90, down from Standard Chartered’s prior estimate of $98. Earlier this week, BNP Paribas SA cut its 2012 price Predictions, and Morgan Stanley said a resumption in exports from Libya would trigger a reduction of its estimates. U.S. gross domestic product grew at a 1.1 percent annual pace in the second quarter, down from the 1.3 percent that the government estimated last month, according to a Bloomberg News survey of economists before a Commerce Department report tomorrow. Bernanke will deliver a speech to central bankers tomorrow at a meeting in Jackson Hole, Wyoming. The U.S. East Coast region, which has 10 operating refineries with a capacity of 1.21 million barrels a day and accounts for 7.1 percent of total U.S. operating capacity, braced itself for Hurricane Irene, the strongest Atlantic storm to threaten the U.S. since 2005. Irene hit the Bahamas on a course that may take it near North Carolina this weekend and New England next week. The Category 3 hurricane packed maximum sustained winds of 115 miles (185 kilometers) per hour as it churned 735 miles south of Cape Hatteras on the North Carolina coast, the U.S. National Hurricane Center said in an advisory at 5 a.m. Miami time. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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