Oil traded near the highest close in two days in New York after U.S. stockpiles fell and refinery utilization rose, countering concern that global fuel demand will falter as manufacturing stagnates in Europe. Futures swung between gains and losses after rising 2.3 percent yesterday. Crude supplies in the U.S., the world’s biggest oil user, slid 4.7 million barrels last week, the Energy Department said. Inventories were forecast to drop 1.38 million, according to a Bloomberg News survey. Refineries operated at 92.7 percent of capacity, the highest rate since July 2007. Industrial output in the euro area was probably unchanged in May from April, a survey showed before a report today. “To move higher from here we would need to see two out of three big global economies -- Europe, the U.S. or China --firmly back into growth territory,� said Michael McCarthy, a chief market strategist at CMC Markets in Sydney who predicts oil will trade between $81.50 and $88.50 a barrel. The stockpile drop was “clearly the driver� for yesterday’s gains, he said. Crude for August delivery was at $85.52 a barrel, down 29 cents, in electronic trading on the New York Mercantile Exchange at 2:21 p.m. Singapore time. The contract yesterday climbed $1.90 to $85.81, the highest close since July 9. Prices have decreased 13 percent this year. Brent oil for August settlement on the London-based ICE Futures Europe exchange was at $99.92 a barrel, down 31 cents. The European benchmark contract was at a premium of $14.40 to New York-traded West Texas Intermediate grade. The spread was $14.42 yesterday, the widest in four weeks. Bollinger Band Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.38 a barrel today, according to data compiled by Bloomberg. Futures have halted declines near that indicator every day since July 6. Buy orders tend to be clustered close to chart-support levels. U.S. crude stockpiles fell the most since December, the Energy Department report showed. Supplies at Cushing, Oklahoma, the delivery point for WTI, decreased 859,000 barrels to 46.8 million, the biggest percentage loss since January. Gasoline inventories climbed 2.8 million barrels last week, the report showed. They were forecast to add 500,000 barrels, according to the median estimate of 10 analysts surveyed by Bloomberg. Distillate supplies, a category that includes heating oil and diesel, gained 3.1 million barrels compared with a projected 625,000-barrel increase. Economic Slowdown Industrial production in the euro area probably failed to increase in May after two months of decline, according to the median estimate of economists in a Bloomberg survey before data today from the European Union’s statistics office. China may say tomorrow that its economy expanded 7.7 percent in the second quarter from a year earlier, the slowest pace in more than three years, a separate survey showed. Australian employers unexpectedly cut payrolls in June, a government report showed today. South Korea announced a surprise interest-rate cut, highlighting concern that exports are threatened by Europe’s failure to end its debt crisis. Global oil consumption will rise by an average 900,000 barrels a day this year, or about 1 percent, the Organization of Petroleum Exporting Countries said yesterday in its monthly report. Growth will slow in 2013 to 800,000 barrels a day as the economy cools, according to the 12-member group’s first assessment for next year. Markets will be “comfortable� because of increased production by non-member producers, the report showed. OPEC, which accounts for about 40 percent of global supplies, will need to provide an average 29.6 million barrels a day in 2013, it said. That’s 300,000 barrels less than this year and about 1.8 million below current production rates. 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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