Oil drops from 3 day

Oil declined from a three-day high in New York as investors bet that increasing U.S. crude supplies and Europe’s spreading debt crisis signaled demand for raw materials may falter. Futures fell as much as 0.9 percent after the American Petroleum Institute said crude inventories rose for the first time in six weeks. Prices also dropped after Ireland joined Portugal and Greece as the third euro-area nation to have its credit rating reduced to below investment grade. “There’s still concern around the euro-zone,” 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. “The crude market hasn’t improved much in terms of those supply dynamics. Demand is still pretty sluggish.” Crude for August delivery slipped as much as 90 cents to $96.53 in electronic trading on the New York Mercantile Exchange, and was at $97.16 at 11:35 a.m. Singapore time. The contract on Tuesday climbed $2.28, or 2.4 percent, to $97.43, the highest since July 7. Prices also slid after the China Federation of Logistics and Purchasing said oil-processing volumes shrank 0.7 percent from a year earlier to 35.5 million metric tons in June. That’s down from May’s 38.47 million tons, the third-highest on record. China processing Brent oil for August settlement fell 45 cents, or 0.4 percent, to $117.30 a barrel on the ICE Futures Europe exchange in London. That took the European benchmark contract to a premium of $20.14 a barrel above U.S. futures, compared with $20.32 on Tuesday and the record close of $22.29 on June 15. China’s gross domestic product for the second quarter climbed 9.5 percent, the country’s statistics bureau said. That was down from 9.7 percent in the first quarter. “The weaker data on GDP and oil processing are not very promising,” said Victor Shum, a senior principal at consultants Purvin & Gertz in Singapore. “If we continue to see lackluster growth, that limits gains in oil. We have to wait for the DOE numbers but the API’s showed sort of a large gain so it’s unexpected.” U.S. crude inventories climbed 2.3 million barrels last week to 359.4 million, the industry-funded American Petroleum Institute report showed on Tuesday. Ireland rating Oil-supply totals from the American Petroleum Institute and the Energy Department have moved in the same direction 71 percent of the time over the past year. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. Moody’s Investors Service cut Ireland to Ba1 from Baa3, citing the probability that the country will need additional official financing and for investors to share in losses before it can return to the private market to borrow. The euro fell to a four-month low on Tuesday against the dollar as European finance ministers failed to present a solution to the financial contagion that’s threatening to spread to Italy from Greece, Ireland and Portugal. The Organization of Petroleum Exporting Countries projected that world oil demand will average about 88.1 million barrels a day this year, up 1.4 million from last year. It also said consumption would grow at a slower pace for a second year in 2012 as usage falls in Europe and other industrialized nations. World demand Global oil consumption will average 89.5 million barrels a day in 2012, OPEC’s Vienna-based secretariat said on Tuesday in its monthly report, giving its first forecast for next year. That’s up 1.5 percent from the 2011 estimate. New York crude futures have averaged $98.34 a barrel this year, according to data compiled by Bloomberg. That’s up from $79.61 in 2010. The Energy Department reduced its forecast for prices in 2011 to an average $98.43 a barrel from $101.91 in its monthly Short-Term Energy Outlook, released on Tuesday. The department also cut its forecast for global consumption for this year to 88.16 million barrels a day from 88.43 million estimated last month.