Oil fell from the highest in more than five months on speculation yesterday’s surge above $100 a barrel was exaggerated amid concern Europe’s debt crisis will slow economic growth in the U.S., the biggest crude consumer. Futures dropped as much as 1 percent after closing above $102 a barrel yesterday. Crude’s relative strength index rose to 72.8, signaling prices may have advanced too quickly. Equities tumbled after Fitch Ratings said U.S. banks face a “serious risk� their creditworthiness will deteriorate if the European crisis worsens. London-traded Brent’s premium to West Texas Intermediate grade narrowed for an eighth day. “Overhanging the market is the concern that this contagion in Europe will continue to flare up,� said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, who sees resistance to prices at $102. “The market should oscillate around $100 for a while.� Crude for December delivery slid as much as 97 cents to $101.62 a barrel in electronic trading on the New York Mercantile Exchange. It was at $102.04 at 11:44 a.m. Singapore time. Yesterday, the contract climbed $3.22 to $102.59, the highest since May 31. Prices have gained 11.7 percent this year, after increasing 15 percent in 2010. Brent oil for January settlement on the London-based ICE Futures Europe exchange fell as much as $1.30, or 1.2 percent, to $110.58 a barrel. The European contract was $9.25 higher than West Texas crude, the smallest premium since March 8. The spread is down 67 percent from a record $27.88 on Oct. 14. Seaway Pipeline Oil in New York surged yesterday after Enbridge Inc. said it will reverse the direction of the Seaway pipeline, adding an outlet to transport crude from the central U.S. and Canada to the coast of the Gulf of Mexico. The change may reduce stockpiles at the Cushing, Oklahoma, storage hub that has lowered the price of benchmark West Texas against Brent. Goldman Sachs Group Inc. said Brent’s premium will shrink to $6.50 a barrel sooner than it had estimated, citing the reversal of the pipeline. The spread will narrow to that level in six months, half the period the bank forecast previously, David Greely, a New York-based managing director, said in an e- mailed report. Crude inventories at Cushing increased for the fifth time in six weeks, rising to 32 million barrels in the period to Nov. 11, according to an Energy Department report yesterday. Technical Resistance Oil is decreasing after yesterday’s rally stopped short of technical resistance at $103.39 a barrel, according to data compiled by Bloomberg. On the weekly chart, that’s the 61.8 percent Fibonacci retracement of the intraday decline to $32.40 in December 2008 from a record high of $147.27 in July that year. The 14-day RSI climbed above 70 for the first time since April 8, indicating gains aren’t sustainable. The reading was 70.6 today. The Standard & Poor’s 500 Index of stocks lost 1.7 percent yesterday. Fitch said that while U.S. lenders have “manageable direct exposures� to Greece, Ireland, Italy, Portugal and Spain, further turmoil in those markets poses a risk. Asian equities fell for a third day today. The U.S. is the world’s largest oil consumer, using 19.1 million barrels a day in 2010, or 21 percent of global demand, according to BP Plc’s annual Statistical Review. The European Union consumed 16 percent. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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