Oil fell in New York, trimming its biggest weekly gain since February, as a drop in Japanese industrial output countered speculation U.S. economic growth and a deal to tame Europe’s debt crisis will boost fuel demand. Futures slipped as much as 0.6 percent after Japanese factory production declined 4 percent in September from the previous month, almost twice as much as the median economist estimate in a Bloomberg News survey. Prices surged yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year and European leaders agreed a deal to curb the region’s debt crisis. “Up here oil is expensive given there is no real pressure on demand yet, it’s just all optimism,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. The drop in Japanese manufacturing “would alleviate demand for crude. It should create softness in the price,” he said. Crude oil for December delivery decreased as much as 60 cents to $93.36 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.39 at 1:07 p.m. Sydney time. The contract yesterday advanced $3.76 to $93.96, the highest close since Aug. 1. Prices are 6.9 percent higher this week, the biggest gain since the period ended Feb. 25. Futures have climbed 2.2 percent this year. Brent oil for December settlement dropped 43 cents, or 0.4 percent, to $111.65 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $18.26 to New York crude, compared with $18.12 yesterday and a record settlement of $27.88 on Oct. 14. Economic Growth The U.S. economy expanded at a 2.5 percent annual rate, up from 1.3 percent in the prior three months, Commerce Department figures showed yesterday in Washington. Household purchases, the biggest contributor to gross domestic product, increased at a 2.4 percent pace, more than forecast by economists. European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and agreed to boost a rescue fund to 1 trillion euros ($1.4 trillion) in a package intended to tame a debt crisis that threatens to slow the global economy and curb demand for commodities. The U.S. is the world’s biggest oil user, at 19.1 million barrels a day in 2010, or 21 percent of global consumption, according to BP Plc’s annual Statistical Review of World Energy. The European Union accounted for 16 percent of the total, and Japan for 5 percent. 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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