Oil rose to a three-month high in New York amid speculation that central banks in the U.S. and China will ease monitory policy to stimulate growth. West Texas Intermediate futures added as much as 1.1 percent after minutes of the U.S. Federal Reserve’s last meeting showed many policy makers favor more stimulus unless the economic recovery picks up. People’s Bank of China Governor Zhou Xiaochuan said adjustments to interest rates and banks’ reserve requirements are still possible. U.S. crude inventories dropped 5.4 million barrels last week, the Energy Department said. That was more than forecast. “All the bad news for the economy is good news because it means we are that much closer to quantitative easing,� said Torbjoern Kjus, an oil analyst at DNB ASA in Oslo. “The Chinese will likely do it because the leadership does not want to transfer power without securing the economy first.� Oil for October delivery gained as much as $1.03 to $98.29 a barrel in electronic trading on the New York Mercantile Exchange, the highest since May 4. The contract was at $97.91 at 11:33 a.m. London time. Prices are 0.9 percent lower this year. Brent oil for October settlement advanced 1.1 percent to $116.14 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to WTI was at $18.23, from $17.65 yesterday. Fuel Stockpiles Oil is extending its rally in New York after rising above long-term technical resistance. Futures yesterday settled higher than the 200-day moving average for the first time since May 10, according to data compiled by Bloomberg. Investors typically buy contracts when chart resistance is breached. Members at the Federal Open Market Committee’s gathering that ended Aug. 1 indicated monetary easing will be needed “fairly soon� unless there are signs of a durable economic pickup, the minutes showed. Many participants said a new large- scale asset-purchase program “could provide additional support for the economic recovery.� Zhou’s comments in Beijing leave the door open for further monetary stimulus after the People’s Bank of China added 220 billion yuan ($34.6 billion) to the banking system via reverse- repurchase agreements yesterday. Chinese Premier Wen Jiabao said last week that easing inflation allows more room to adjust monetary policy. The fifth generation of leaders since Mao Zedong led China’s 1949 revolution will be appointed to take the helm of the Communist Party later this year. Storm Isaac Tropical Storm Isaac “slightly weakened� as it moved into the Caribbean Sea, the National Hurricane Center said, based on reconnaissance data collected by an Air Force Reserve aircraft. Isaac, the ninth named storm of the Atlantic hurricane season that runs through November, was 255 miles (410 kilometers) south-southeast of San Juan, Puerto Rico, the Miami- based center said in an advisory at 5 a.m. Atlantic time. The storm, which may reach southern Florida on Aug. 27, is forecast to strengthen over the next two days and could become a hurricane. The U.S. and China are the world’s biggest oil users, accounting for a combined 32 percent of the world’s consumption, according to BP Plc (BP/)’s Statistical Review of World Energy. Gasoline inventories in the Energy Department report fell 962,000 barrels versus a forecast drop of 1.35 million in the Bloomberg survey. Distillate supplies, which include heating oil and diesel, rose 992,000 barrels, near the predicted gain of 1 million. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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