Oil rebounded from a 10-month low in New York as investors bet fuel demand will increase amid shrinking stockpiles and comments by the Federal Reserve that it is prepared to use a range of methods to bolster the economy. Futures gained for the first time in three days after the Fed said in a statement yesterday it will keep interest rates near zero until mid-2013 and use other tools “as appropriate.” Crude inventories fell the most since June, according to the industry-funded American Petroleum Institute. An Energy Department report today may show stockpiles rose a third week. “The Fed’s announcement to keep the interest rate low reversed the appetite for risk asset classes,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore, who predicts crude in New York will average $100 a barrel in the third quarter. “The other key factor is the surprise drop in U.S. crude inventories. That’s boosted some of the oil sentiment.” Crude for September delivery advanced as much as $3.13, or 4 percent, to $82.43 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.28 at 2:14 p.m. Sydney time. The contract yesterday fell $2.01, or 2.5 percent, to $79.30, the lowest settlement since Sept. 29. Prices are down 11 percent this year. Brent oil for September settlement gained $2.50, or 2.4 percent, to $105.07 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.65 to U.S. futures, compared with yesterday’s record close of $23.27. U.S. Supplies “It looks like markets want to turn back up,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in an e-mailed note. Traders bought oil after the settlement and “prices were back in positive numbers after the API report, which showed inventory drawdowns across the board,” he said. U.S. crude-oil supplies declined 5.21 million barrels to 348.6 million last week, the American Petroleum Institute said. An Energy Department report today may show stockpiles increased 1.35 million barrels in the seven days ended Aug. 5, according to the median estimate of 12 analysts and traders in a Bloomberg News survey. Gasoline inventories decreased 1.01 million barrels to 211.2 million barrels, the API data shows. The Energy Department report will probably show they rose 900,000 barrels, according to the Bloomberg News survey. Equities Rally The API collects stockpile data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed for its weekly survey. Oil-supply totals from the API and the department have moved in the same direction 71 percent of the time over the past year and 75 percent over the past four years. The MSCI Asia Pacific Index added 2.3 percent as of 1:15 p.m. in Tokyo as global equities rebounded from a $7.8 trillion rout. The Standard & Poor’s 500 Index jumped 4.7 percent to 1,172.53 at the 4 p.m. close in New York yesterday, its biggest gain since March 2009. The U.S. Energy Department reduced its crude-oil price forecast for 2011, according to a report yesterday. West Texas Intermediate will average $95.71 a barrel, down 2.8 percent from July’s projection of $98.43, the department said in its monthly Short-Term Energy Outlook. It increased its forecast for global oil consumption this year to 88.19 million barrels a day from 88.16 million estimated last month. The Organization of Petroleum Exporting Countries cut its oil-demand forecasts for 2011 and next year as the global economic recovery loses momentum. OPEC reduced its consumption estimate for this year by 150,000 barrels a day. Global demand this year will rise by 1.2 million barrels to 88.1 million barrels a day, the group said yesterday in its monthly market report. Consumption next year will be 89.4 million, following a “minor downward revision,” it said. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Jane, Ching Shen Lee at jalee@bloomberg.net

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