By Ben Sharples and Christian Schmollinger Feb. 9 (Bloomberg) -- Oil in New York rose from the lowest in eight days on signs of demand increases after an industry- funded report showed crude stockpiles dropped for the first time in five weeks in the U.S. Futures advanced as much as 0.7 percent after the American Petroleum Institute’s report yesterday said inventories fell 558,000 barrels to 346 million barrels last week. A U.S. Energy Department report today may show supplies in the world’s biggest consumer of the commodity climbed 2 million barrels, according to a Bloomberg News survey. “The market will closely watch the official U.S. EIA oil inventory data,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. The industry report showed a “surprise” decline as imports fell and refinery use climbed, he said. The March contract gained as much as 63 cents to $87.57 a barrel in electronic trading on the New York Mercantile Exchange, and was at $87.42 at 2:25 p.m. Singapore time. Yesterday, it lost 54 cents, or 0.6 percent, to $86.94. Prices are 19 percent higher than a year ago. Brent crude for March settlement rose as much as 46 cents, or 0.5 percent, to $100.38 a barrel on the ICE Futures Europe exchange in London. Prices exceeded $100 for an eighth consecutive day. London Brent’s premium to West Texas Intermediate, the crude grade traded in New York, narrowed today to $12.89 a barrel as WTI’s gains outpaced the European benchmark. The price difference yesterday reached a record $12.98, according to data compiled by Bloomberg. The gap averaged 76 cents last year. API Inventories U.S. crude stockpiles fell by 1.5 million barrels in the Gulf Coast region, according to the API data yesterday. Supplies in the Petroleum Administration for Defense District 2, consisting of the Midwest states, dropped by 1.3 million. Inventories at the Cushing, Oklahoma, delivery point for New York oil futures declined from a record, dropping 927,000 to 37.5 million. “The API report was encouraging,” said Stephen Schork, President of the Schork Group Inc. in Villanova, Pennsylvania, in a report today. “The only significant build in crude inventories was on the West Coast which, due to its geographical disparity, is often overlooked by the markets. All told this was the most bullish report the API has released in weeks, but will the DOE corroborate?” Crude imports dropped 11 percent last week to 8.6 million barrels, the API data showed. Energy Department Gasoline supplies gained 3.2 million barrels to 239.7 million barrels, the API said. Motor fuel inventories probably increased 2.6 million barrels from 236.2 million a week earlier, according to the median of 16 analyst estimates before the government report today. The projected advance would leave stockpiles at the highest level since Feb. 26, 1993. Distillate fuel levels, a category that includes heating oil and diesel, dropped 538,000 barrels to 160.7 million, the industry group reported. Supplies probably slipped 1 million barrels, or 0.6 percent, from 164.1 million, the inventory survey showed. The U.S. Energy Department cut its crude-oil price forecast for 2011 to an average $93.26 a barrel from $93.42, according to its monthly Short-Term Energy Outlook, released yesterday. It is scheduled to release its weekly inventory report at 10:30 a.m. today in Washington. Tens of thousands of Egyptians filled Cairo’s Tahrir Square yesterday as Vice President Omar Suleiman sought to convince demonstrators that the government is serious about moving toward democracy while stabilizing the economy. --With assistance from Ann Koh in Singapore. Editors: Jane, Ching Shen Lee, John Viljoen To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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