By Grant Smith Feb. 12 (Bloomberg) -- Oil fell in New York for the first day in five after China, the world’s second-largest oil consumer, sought to cool its economic expansion. The People’s Bank of China ordered banks to set aside more deposits as reserves for the second time in a month, boosting the dollar and sending futures below $74 a barrel. A weekly Energy Department report today may show U.S. crude and gasoline supplies rose last week, according to analysts surveyed by Bloomberg News. “The latest move is another attempt to cool down rampant growth,” said Neil Atkinson, director of energy research at Datamonitor in London. “The outlook for oil demand growth for China has been getting pared back, and I think they’ll be lucky to see much more than 300,000 barrels a day growth this year.” Crude oil for March delivery fell as much as $1.78, or 2.4 percent, to $73.50 a barrel in electronic trading on the New York Mercantile Exchange and was trading at $73.97 at 11:57 a.m. in London. Yesterday, New York crude futures rose 1 percent to settle at $75.28. Brent crude oil for April delivery fell as much as $1.59, or 2.2 percent, to $72.53 a barrel on the London-based ICE Futures Europe exchange. The contract was at $72.98 at 11:57 a.m. London time. China’s central bank said today it will raise banks’ reserve requirement ratio by 50 basis points. China’s policy makers aim to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive a recovery from the first global recession since World War II. Dollar Recovery “Everything has had a bit of a setback this morning,” said Tony Machacek, a broker at Bache Commodities Ltd. in London. “The Chinese decision has helped a dollar recovery, which in turn has led commodities like oil lower.” Oil’s losses are more likely to be driven by the slide in the euro rather than concerns that China’s decision will dent consumption, according to Societe Generale SA. The U.S. currency strengthened to $1.3557 against the euro as of 11:59 a.m. London time from $1.3693. China “has surprised the market a bit in that it’s happening so quickly after the last increase” in the country’s reserve requirement, said Mike Wittner, SocGen’s head of oil market research. “But it’s premature to say that China is acting too quickly and damaging its economy and that oil demand will suffer,” Wittner said. “If the Chinese government is being pro-active in hitting off inflation and maintaining steady growth, it’s not a bad thing.” Energy Department Report The Energy Department’s weekly report, delayed by two days because of snowstorms, will probably show U.S. crude stockpiles climbed 1.6 million barrels in the week to Feb. 5, based on the median estimate from 16 analysts. Gasoline inventories are expected to have rebounded 600,000 barrels from the previous week. On Feb. 9, the industry-funded American Petroleum Institute reported crude supplies rose to the highest level since October last year and gasoline reached 228.8 million barrels, the most since March 1999. “The oversupply in the market is quite significant at the moment,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “It’s difficult to see why prices will continue to hover around current levels. A price below $70, maybe around $60, would be more sustainable.” To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net. Grant Smith in London at gsmith52@bloomberg.net

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