Oil declined for a third day on skepticism that a rebounding U.S. economy will reduce surplus inventories in the world’s biggest oil-consuming country. Oil fell as much as 1 percent as supplies at Cushing, Oklahoma, the delivery point for New York-traded West Texas Intermediate, climbed to the highest level since at least 2004, the Energy Department said last week. Gasoline rose 6.15 million barrels to 236.2 million in the week ended Jan. 28, the highest level since March 1993, the department reported Feb. 2. “There’s no fundamental reason for the market here to show strength,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Gasoline supplies are at an 18-year high, there’s a large amount of crude oil at Cushing and fuel demand is tepid.” Crude oil for March delivery declined 39 cents, or 0.4 percent, to $88.64 a barrel at 10:46 a.m. on the New York Mercantile Exchange. Futures are up 25 percent from a year ago. Brent crude oil for March settlement climbed 7 cents to $99.90 a barrel on the London-based ICE Futures Europe exchange. The contract reached $103.37 on Feb. 3, the highest level since Sept. 26, 2008. Total fuel demand decreased 0.3 percent to 18.8 million barrels a day in the week ended Jan. 28, the lowest level since November, according to the department’s report. Talks in Egypt Talks between Egypt’s government and opposition leaders helped the country’s financial system take steps toward normality, without ending protests demanding the immediate departure of President Hosni Mubarak. Oil in New York surged to $92.84 a barrel on Jan. 31, the highest level since Oct. 7, 2008, on concern Egyptian unrest would disrupt shipments from the Middle East. Vice President Omar Suleiman promised a draft list within a month of changes needed to hold free elections. Protesters remained on the streets of central Cairo, insisting that Mubarak step down before his term ends in September, though there was none of the violence that erupted last week. Banks are reopening and the government resumed the sale of Treasury bills today. “It looks like the situation in Egypt is calming down,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Source