Oil dropped a second day in New York as crude stockpiles in the U.S. rose and concern eased that unrest in Egypt will disrupt supplies through the Suez Canal. Futures slumped 1.5 percent yesterday after canal officials said traffic is moving normally on the waterway that carries more than 2.2 million barrels of oil a day. U.S. stockpiles increased for a fourth week, the American Petroleum Institute said. An Energy Department report today may also show supplies climbed. New York crude’s discount to Brent widened after the API said inventories at the Cushing oil hub climbed to a record. “The news has filtered out that the Suez Canal hasn’t been disrupted and the chances of contagion from Egypt to other big oil producers is relatively small,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone today. “It’s caused a little bit of a sell-off in the crude market.” Crude for March delivery fell as much as 32 cents, or 0.4 percent, in electronic trading on the New York Mercantile Exchange, trading at $90.49 a barrel at 2:12 p.m. Singapore time. Yesterday, the contract dropped to $90.77. Prices settled at $92.19 on Jan. 31, the highest since Oct. 3, 2008. Oil is up 17 percent from a year ago. Brent oil for March settlement traded at $101.42 a barrel, down 32 cents, or 0.3 percent, on the ICE Futures Europe exchange in London. It gained 0.7 percent to $101.74 yesterday, the highest settlement since Sept. 26, 2008. Brent Premium Brent’s premium over New York futures widened to $10.90 a barrel today. The difference was $8.82 on Jan. 31. The American Petroleum Institute reported that U.S. crude stockpiles increased 3.77 million barrels to 346.5 million last week. An Energy Department report today may show inventories climbed by 2.5 million barrels, according to the median of 15 analyst estimates in a Bloomberg News survey. Supplies in Cushing, Oklahoma, the delivery point for West Texas Intermediate crude futures, gained 667,000 barrels to 38.4 million barrels, the most since Bloomberg data from the API begins in 2004. The premium paid for April contracts in New York over March futures, known as the contango, rose to $2.76 a barrel in New York, the highest since May, as rising supplies depress nearer- term prices. Crude Rally About 2.5 percent of global oil production moves through Egypt via the Suez Canal and the adjacent Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc. Egyptian President Hosni Mubarak said he won’t stand down until elections due in September, angering the hundreds of thousands gathered in Cairo’s Tahrir Square to demand an immediate end to his regime. Crude capped the biggest two-day rally since May on Jan. 31 on concern the unrest in North Africa will spread to crude- producing countries in the Middle East. Jordan announced a change of government yesterday following protests last week. Prime Minister Samir Rifai resigned and King Abdullah asked Marouf Bakhit, to form a new government. The Jordanian announcement and Egyptian protests follow a revolt in Tunisia that forced President Zine El Abidine Ben Ali into exile on Jan. 14. Saudi Arabia, the United Arab Emirates and Kuwait, three of OPEC’s biggest oil producers, are located on the Arabian Peninsula and haven’t seen unrest. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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