Oil rose for a second day in New York as shrinking U.S. crude stockpiles countered concern that the European sovereign debt crisis is worsening. Futures climbed as much as 1.3 percent, erasing a 2.1 percent decline. U.S. crude stockpiles dropped the most since December last week, the Department of Energy said yesterday. OPEC will need to produce 31 million barrels a day to balance the market this quarter, or 1 million barrels a day more than current production, Standard Chartered Plc said. The dollar fell after the Federal Reserve this week said it may expand stimulus, increasing the appeal of commodities. “Yesterday’s DOE report was almost unanimously bullish,” Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania, said in a note to clients today. “We are looking for a recoupling of the dollar- oil link. Whether the Fed is aware of it or not, it likely just sowed the seeds of another rally in oil.” Crude for September delivery rose as much as $1.34 to $84 a barrel on the New York Mercantile Exchange, and was at $83.61 at 3:25 p.m. Singapore time. It earlier dropped as much as $1.75 to $81.14. Prices are 7.2 percent higher the past year. Brent oil for September settlement gained 55 cents, or 0.4 percent, to $107.23 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $23.64 to U.S. futures, compared with yesterday’s record close of $23.79. U.S. Supplies The Organization of Petroleum Exporting Countries’ 12 members boosted production by 400,000 barrels a day last month to an average of 30.07 million a day, the group said in a report on Aug. 9. U.S. crude-oil inventories decreased 5.23 million barrels to 349.8 million last week, according to an Energy Department report. It was the biggest decline since the week ended Dec. 17. Inventories were forecast to climb 1.35 million barrels, according to a Bloomberg News survey of analysts. Total products supplied, a measure of demand, surged 652,000 barrels a day to 20.3 million, the highest level since Dec. 24, according to the Energy Department report. Gasoline stockpiles dropped 1.59 million barrels to 213.6 million. The dollar fell to $1.4230 per euro from $1.4178 in New York yesterday, when it climbed 1.4 percent. To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net To contact the editor responsible for this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net

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