Oil dropped for a second day in New York after signs of weakening gasoline use in the U.S. and slowing Chinese exports stoked speculation that demand may falter in the world’s largest consumers of crude. Futures slipped as much as 1.1 percent after American Petroleum Institute data showed U.S. gasoline demand fell the most in more than five years. In China, exports climbed the least since February last month as imports slowed, data from the customs bureau showed today. Brent oil in London was at the highest premium to New York crude in five weeks. “The economy is showing moderate, sub-trend growth,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by phone today. Oil prices will remain vulnerable to “supply shocks, if and when they come along,” he said. Crude for November delivery dropped as much as 93 cents to $84.64 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.84 at 1:20 p.m. Sydney time. The contract yesterday fell 24 cents, or 0.3 percent, to $85.57. Prices are down 7.2 percent this year. Brent oil for November settlement fell 30 cents, or 0.3 percent, to $111.06 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $26.33 to U.S. crude, the most since Sept. 7 and near the record of $26.87 on Sept. 6. Gasoline Demand Implied gasoline demand in the U.S., the world’s biggest oil user, dropped 10.5 percent in the week ended Oct. 7, the API report showed. That was the biggest decline since March 2006. Crude stockpiles slid 3.81 million barrels. An Energy Department report today is forecast to show crude inventories rose 800,000 barrels in a Bloomberg News survey of analysts. The API 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. A separate report today may show U.S. initial jobless claims rose for a second week to 405,000 in the period ended Oct. 8, according to a survey. In China, the second largest crude consumer after the U.S., export growth slowed to 17.1 percent in September, compared with a median estimate of 20.5 percent in a Bloomberg News survey. Import growth slid to 20.9 percent, the customs data showed. The International Energy Agency yesterday cut its 2012 demand estimate for oil by 210,000 barrels a day and said Libyan output will rebound to 50 percent more than earlier forecast. Libyan Output The North African nation may pump about 600,000 barrels a day of crude oil by the end of the year, up from an earlier estimate of as much as 400,000 barrels, according to the IEA. The national oil company and international partners have restored production at some areas and output has started from four fields, the IEA said. Total SA, Europe’s third-biggest oil company, said yesterday that it plans to resume operations at the Mabruk onshore Libyan oil field in the coming weeks. Fighting in Libya reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 45,000 barrels a day in August, according to Bloomberg estimates. It pumped 100,000 barrels a day last month. Saudi Arabia’s spare production capacity is greater than 2.5 million barrels a day, Prince Turki bin Faisal bin Abdulaziz al-Saud said in London. The kingdom is the biggest producer in the Organization of Petroleum Exporting Countries, which is responsible for 40 percent of global oil output. 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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