Crude oil fell on speculation that last week’s 10 percent advance will be undone as U.S. inventories climb and fuel consumption declines. Oil followed equity markets lower today, reversing gains made last week after the U.S. economy lost fewer jobs than expected. Prices may be due for a “crash” as supplies rise and demand falls, Stephen Schork, publisher of the Schork Report, said today. Crude inventories rose to the highest since 1990 as fuel use tumbled, an Energy Department report on May 6 showed. “With stock markets down, it’s hard to argue that the economy is getting better,” said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. “Last week’s supply and demand numbers point to lower prices.” Crude oil for June delivery fell 87 cents, or 1.5 percent, to $57.76 a barrel at 9:59 a.m. on the New York Mercantile Exchange. The contract rose 3.4 percent to $58.63 a barrel on May 8, the highest settlement since Nov. 11. Prices are up 30 percent this year. The Standard & Poor’s 500 Index declined 2 percent to 910.34. The Dow Jones Industrial Average dropped 1.5 percent to 8,448.09. Chinese consumer prices fell 1.5 percent in April from a year earlier, the nation’s statistics bureau said in Beijing today. China is the world’s second-biggest oil consumer. “This is a reality check after the extraordinary run we had last week,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “The Chinese CPI numbers today are focusing attention on the threat of deflation. Also, the dollar is up from its multiweek lows.” Stronger Dollar The dollar rose 0.3 percent to $1.3592 per euro, from $1.3668 on May 8. The U.S. currency earlier reached $1.3668, the weakest since March 24. U.S. crude-oil inventories climbed to 375.3 million barrels during the week ended May 1, according to the Energy Department. Stockpiles probably rose 1 million barrels last week, according to the median of responses in a Bloomberg News survey. Total daily fuel demand averaged 18.2 million barrels in the four weeks ended May 1, down 7.9 percent from a year earlier, the department said. It was the lowest consumption level for a four-week period since May 1999. “Supplies are high and rising and demand is low and falling, yet the Nymex is moving higher,” the Schork Report said. “It is going to crash, but for the time being, we would rather hop onto the bandwagon rather than fight the tape.” Saudi Shipments Saudi Arabian Oil Co., the world’s biggest state oil company, maintained cuts in contracted supplies of crude oil to Asia in June, refinery officials said. The Dhahran, Saudi Arabia-based producer will keep in place reductions in shipments to refiners of between 10 percent and 15 percent from levels agreed under annual contracts, according to officials at processors in China, Japan, Taiwan and South Korea who received notices from the company. The officials asked to remain anonymous, citing confidentiality agreements. This marks the seventh straight month of output cuts by Saudi Aramco. The Organization of Petroleum Exporting Countries agreed at three meetings last year that the 11 members with quotas would reduce output by 4.2 million barrels a day. Brent crude oil for June settlement declined 97 cents, or 1.7 percent, to $57.17 a barrel on London’s ICE Futures Europe exchange.

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