Oil fell from a two-year high in New York amid concern that China’s second interest-rate increase since October may slow economic growth in the world’s biggest energy consumer. Futures snapped a five-day rising streak after the People’s Bank of China boosted benchmark one-year lending and deposit rates by 25 basis points Dec. 25 to tackle the fastest inflation in more than two years. Oil advanced earlier as temperatures fell and storms blanketed the eastern U.S. with snow, raising demand for heating fuels. The Chinese rate increase “cools the economy and hence oil demand,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. China overtook the U.S. last year as the largest energy user. Crude for February delivery traded at $91.08 a barrel, down 43 cents, in electronic trading on the New York Mercantile Exchange at 12:27 p.m. London time. The contract earlier rose as much as 37 cents, or 0.4 percent, to $91.88 a barrel, the highest price since Oct. 7, 2008. Brent crude for February settlement fell 15 cents at $93.62 a barrel on the ICE Futures Europe exchange London. Brent climbed as high as $94.52 earlier. Futures in New York climbed 4 percent last week. Floor trading was closed Dec. 24 for the Christmas holiday. Oil, which rallied 78 percent in 2009, has gained 15 percent this year as the global economic recovery bolstered demand, reducing supplies held in storage. U.S. Inventories Crude inventories in the U.S. dropped 5.33 million barrels to 340.7 million even as imports increased, the Energy Department said Dec. 22 in its weekly report. Stockpiles have decreased so far this month by 19 million barrels, or 5.3 percent, the most since December 2006. “Despite the two or three draws we have had, inventories are still above average,” said Tobias Merath, head of commodities at Credit Suisse Group in Zurich. “When we move into mid-January and early February, the risk is that oil prices could fall again, not by a lot, but into the 80s.” Sixteen of 30 analysts and traders, or 53 percent, forecast oil prices will rise this week as supplies decline further, the Bloomberg News survey showed. Eight respondents, or 27 percent, predicted crude will fall and six estimated they will be little changed. Last week, 53 percent of survey respondents said the market would drop. New York City may get as much as 20 inches (51 centimeters) of snow by tonight with temperatures dropping as low as 22 degrees Fahrenheit (minus 6 Celsius), according to weather forecaster AccuWeather. “Crude oil came under pressure due to what happened in China but the bad weather on the east coast is causing traders to think demand will increase,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. To contact the reporter on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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