Crude oil traded near a two-day low in New York as concern that the European economy will stall countered the biggest decline in U.S. gasoline stockpiles in almost five months. Futures erased an earlier gain of as much as 0.7 percent. European leaders said yesterday they wouldn’t expand a rescue fund to end the region’s debt crisis. Gasoline supplies also slid last week to the lowest since June 2009, according to the industry-funded American Petroleum Institute. They typically shrink in summer amid the May-to-September peak driving season. “There’s a bit of fallout from what’s happening in Europe,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney who predicts oil in New York will average $100 a barrel this year. The fall in gasoline stockpiles is “price supportive, there’s no doubt about it, but I don’t think you can read too much into it.” Crude for September delivery was at $86.78 a barrel, up 13 cents in electronic trading on the New York Mercantile Exchange at 12:01 p.m. Sydney time. The contract yesterday slipped $1.23, or 1.4 percent, to $86.65, the lowest since Aug. 12. Prices are 15 percent higher the past year. Brent oil for October settlement was at $109.23 a barrel, up 10 cents, on the ICE Futures Europe in London. The contract yesterday dropped 71 cents to $109.13. September oil, which expired yesterday, fell 44 cents, or 0.4 percent, to $109.47. German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected an expansion of the 440 billion-euro ($633 billion) rescue fund and rebuffed calls for joint euro borrowing to end the debt crisis, saying greater economic integration was needed first. Equities Slide Asian equities fell for the first time this week. The MSCI Asia-Pacific Index slipped 0.4 percent to 124.43. U.S. gasoline stockpiles shrank 5.37 million barrels to 205.8 million last week, according to the report from the American Petroleum Institute. It was the biggest decline since the week ended March 18. Supplies are about 1.4 percent below their five-year average, according to API data. Demand for the fuel peaks between the Memorial Day holiday in May and Labor Day in early September. U.S. crude-oil inventories rose 1.75 million barrels, the API data showed. An Energy Department report today may show crude supplies slipped 500,000 barrels and gasoline stockpiles dropped 1.2 million barrels, according to a Bloomberg News survey of analysts. 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 in the past year and 75 percent in the past four years. Tropical Storm Gert degenerated in the North Atlantic far from land, while Tropical Storm Fernanda gained strength in the eastern Pacific, the National Hurricane Center said. 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 in Singapore at akwiatkowsk2@bloomberg.net

Source