Oil fell in New York on signs that a drop in U.S. stockpiles will be smaller than forecast and speculation that OPEC countries including Saudi Arabia are increasing supplies. Futures declined as much as 0.7 percent after an industry report showed inventories slipped 81,000 barrels last week. The Energy Department may say today that supplies fell 1.83 million barrels, according to a Bloomberg News survey. Some OPEC countries may be raising production, according to the International Energy Agency and JPMorgan Chase & Co. Oil prices are likely to remain “choppy,” Goldman Sachs Group Inc. said. “Demand figures have not been strong and we still have more crude oil in storage than in previous years,” Peter Beutel, the president of Cameron Hanover Inc., an energy advisory company in New Canaan, Connecticut, wrote in a note e- mailed today. “Without a constant stream of fresh buying, oil prices have a difficult time staying in positive territory. When the buying dries up, prices sink.” Crude for August delivery fell as much as 67 cents to $93.50 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.62 at 1:39 p.m. Sydney time. The contract yesterday climbed 54 cents to $94.17. Futures are 21 percent higher the past year. Brent oil for August delivery was at $111.20 a barrel, up 25 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $17.58 a barrel to U.S. futures. The difference between front-month contracts in London and New York reached a record close of $22.29 on June 15. Greek Aid Oil also declined amid speculation Greek Prime Minister George Papandreou will fail to pass austerity measures even after winning a confidence vote in parliament. European finance ministers said this week that they would hold off on approving Greece’s 12-billion euro aid package promised for July until passage of plans to cut the deficit, sell state assets and impose a “crisis levy” on wages. “It’s still a long way from commodity markets stopping their focus on Greece and the possibility of default,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $113 a barrel in the third quarter. Crude in New York tumbled as much as 0.8 percent yesterday after David Fyfe, head of the IEA’s industry and markets division, said that the agency is seeing signs Saudi Arabian oil production is rising. U.A.E., Kuwait Fyfe’s comments follow a June 8 meeting of the Organization of Petroleum Exporting Countries at which members failed to reach a consensus on Saudi Arabia’s proposal to raise output to curb prices around $100 a barrel in New York. The kingdom is OPEC’s largest producer and has the bulk of its spare capacity. The U.A.E. is producing 2.5 million to 2.55 million barrels of crude a day, JPMorgan said, citing a person familiar with the situation it didn’t name. Kuwait has an output of 2.55 million to 2.7 million barrels a day, which is “what Kuwait’s clients need,” Mohammad Al-Busairy, the country’s oil minister, said in an interview on June 20. “The countries have been raising output in response to the greater need for crude oil in the summer,” JPMorgan analysts led by New York-based Lawrence Eagles said in a report yesterday. Production is “at or above JPMorgan’s projection for June supply as well as market surveys of expected output.” U.S. Inventories U.S. crude stockpiles slipped 81,000 barrels to 362.9 million last week, according to the industry-funded American Petroleum Institute yesterday. An Energy Department report today may show supplies fell 1.83 million barrels, according to the median forecast of 16 analysts surveyed by Bloomberg News. Oil-supply totals from the American Petroleum Institute and the Energy Department have moved in the same direction 72 percent of the time over the past year. The API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the DOE for its weekly survey. Oil prices are likely to remain “choppy” in the near-term as the market reacts to a slowdown in economic growth, before rising again in the second half of the year amid increasing demand, Goldman Sachs said in an e-mailed report dated June 21. 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 at akwiatkowsk2@bloomberg.net

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