Oil declined for a second day in New York after data showed that China’s crude imports dropped to an 18-month low and the dollar strengthened against the euro, curbing investor demand for raw materials. Futures slipped after China’s net purchases of the commodity fell to 16.1 million metric tons last month from a record 22.9 million tons in September, customs data released in Beijing showed. China is the world’s biggest energy user. Prices slid from the highest level in two years yesterday, snapping a six day rally, after the euro weakened amid concern some governments in Europe may struggle to pay their debt. “The oil price will ease off as China slows its buying to some degree,” said Gavin Wendt, a senior resource analyst at MineLife Pty in Sydney. “Demand out of China has been very strong, that’s the key market. The U.S. demand situation isn’t strong at the moment.” The December contract decreased as much as 55 cents, or 0.6 percent, to $86.17 a barrel in electronic trading on the New York Mercantile Exchange, and was at $86.31 at 12:19 p.m. Singapore time. Yesterday, it lost 34 cents to settle at $86.72. Prices are up 8.8 percent this year. Oil settled at $87.06 a barrel on Nov. 8, the highest price since Oct. 9, 2008, after a six-day rally that matched the longest winning streak since April. “The market is buying dollars and that’s having an adverse affect on commodities,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “There’s serious feeling towards a stronger dollar. It could be Europe and also the fact that people are concerned that the economy is not as strong as it should be.” Fuel Supplies The dollar traded at $1.3745 per euro after advancing 1.1 percent yesterday, its third day of gains. U.S. crude inventories plunged 7.4 million barrels last week, the biggest drop since September 2008, according to the American Petroleum Institute. An Energy Department report today will probably show that supplies increased 1.5 million barrels, according to analysts in a Bloomberg News survey. Distillate stockpiles, including heating oil and diesel, slid 3.99 million barrels last week, the API said. The Energy Department report may show they fell 2 million barrels, according to the Bloomberg News survey. Gasoline inventories dropped 3.45 million barrels, the API said. The department is projected to report a 1 million-barrel decline, the survey shows. “We’ve seen a draw and we need to see if it’s a trend,” Commodity Broking Services’ Barratt said. “Inventories remain high so we have to see whether the data represents a change of trend or just a blip.” The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the department for its weekly survey. Goldman Forecast Oil prices will be “substantially higher” by 2012 as the global stockpile surplus is depleted and as spare capacity from the Organization of Petroleum Exporting Countries declines, Goldman Sachs Group Inc. said in a report dated yesterday. The department lifted its crude oil price forecast for 2011 to an average $85.17 a barrel from $83, according to its monthly Short-Term Energy Outlook, released yesterday. It also boosted its fourth-quarter 2011 forecast by $2 from a month ago to $87 a barrel “as U.S. and global economic conditions improve.” The International Energy Agency in Paris forecast yesterday that China will drive a surge in world energy demand over the next quarter century, as straining supply enhances the market share of the Organization of Petroleum Exporting Countries and growing coal use undermines efforts to contain global warming. Brent crude for December settlement declined 5 cents, or 0.1 percent, to $87.92 a barrel on the ICE Futures Europe exchange in London. Yesterday, it fell 49 cents to $87.97. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net

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