Oil rebounded from the biggest decline in three months after an industry-funded report showed crude stockpiles fell in the U.S. Prices slid yesterday as Saudi Arabia said it may boost supplies. Futures in New York gained as much as 0.7 percent after declining 2.3 percent yesterday. U.S. crude supplies shrank by 1.4 million barrels last week, according to the American Petroleum Institute. The Energy Department may say today that inventories climbed by 2.2 million barrels, a Bloomberg News survey showed. Saudi Arabia can increase output by 25 percent immediately, Oil Minister Ali al-Naimi said. Prices have risen this year on concern tension with Iran threatens supply. “We should see better demand growth in the second half, particularly in the U.S. and China,� said Mark Pervan, head of commodity research at Australia & New Zealand Bank, who forecasts that West Texas Intermediate will average $107 a barrel and Brent $121 this year. “I think the Saudis have some slack but not a lot, and this is a reason fundamentally why oil has quite a positive long-term outlook to it.� Oil for May delivery rose as much as 79 cents to $106.86 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.53 at 1:24 p.m. Singapore time. It dropped $2.49 yesterday to $106.07, the lowest close since March 15. The April contract, which expired, fell $2.48 to $105.61. Front-month prices are up 7.8 percent this year. Brent oil for May settlement was at $124.44 a barrel, up 32 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded WTI was at $17.93. Gasoline Stockpiles U.S. gasoline stockpiles slid 1.4 million barrels last week, API data showed. The Energy Department report will probably show they declined 2 million barrels, according to the median of 11 analyst estimates in the Bloomberg survey. 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 Energy Department for its weekly survey. Brent crude rose 11 percent last month, the biggest gain in a year, amid concern that European Union and U.S. sanctions against Iran’s nuclear program will disrupt Middle East oil exports. Iranian production slipped 45,000 barrels to 3.45 million barrels a day in February, according to data compiled by Bloomberg. The nation has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s supplies, in response to an embargo. Technical Support Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $105.21 a barrel today, according to data compiled by Bloomberg. Futures halted yesterday’s decline near this indicator. Buy orders tend to be clustered near chart-support levels. “Oil rebounded off of the $105 support level,� said Ken Hasegawa, a commodities-derivatives sales manager at Newedge Group in Tokyo. Saudi Arabia has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April, al-Naimi told reporters yesterday in Doha, Qatar. There is no shortage of supply and Saudi Arabia has excess capacity of 2.5 million barrels a day, which makes up the bulk of spare capacity in the Organization for Petroleum Exporting Countries, he said. “We agree whole-heartedly with Al-Naimi’s assertions that supply is flush relative to 2008,� when oil reached a record high, said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, in a note e-mailed today. “Unfortunately, this is a market that can remain irrational, or at least rational on irrelevant criteria, longer than investors can remain solvent and thus we maintain our bullish biases.� To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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