Crude fell from its highest in more than 30 months as forecasts of growing inventories in the U.S. and an interest-rate increase in China fanned concern that demand in the world’s two biggest oil consumers may slow.

Futures slid as much as 0.9 percent in New York before a report tomorrow that may show crude supplies increased by 1 million barrels last week, and after China’s central bank raised one-year lending and deposit rates. Prices also fell after the New York Times reported that sons of Libya’s Muammar Qaddafi are seeking his ouster, stoking speculation that the fighting that has crippled the country’s oil exports may ease.
“The Chinese announcement might put a brake on growth in oil demand in China,” Paul Harris, head of natural resources risk management at Bank of Ireland in Dublin, said by phone.
Oil for May delivery on the New York Mercantile Exchange fell as much as 97 cents to $107.50 a barrel and was at $107.77 at 11:29 a.m. London time. The contract traded as high as $108.78 a barrel on Monday, the front-month contract’s highest price since Sept. 24, 2008. Brent for May settlement fell as much as $1.11, or 0.9 percent, to $119.95 a barrel on London’s ICE Futures Europe exchange. The contract rose to $121.29 a barrel on Monday, the highest since Aug. 4, 2008.
The European benchmark traded at a premium of $12.60 a barrel to U.S. futures. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21 as unrest spread in the Middle East and North Africa and supplies climbed at Cushing.
-----------------China interest rates
China raised interest rates by 25 basis points, the fourth increase since the global financial crisis, to restrain inflation in the world’s fastest-growing major economy.
“Inflation pressures are mounting globally and will push prices higher in China during the course of the year, especially if oil prices remain high,” Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB, said before the announcement. “The central bank needs to send a message that it is doing what it can to maintain price stability.”
In Libya, at least two of Qaddafi’s sons are proposing a plan to move him from power and oversee a democratic transition under his son, Saif al-Islam, the New York Times reported on Monday, citing an unidentified diplomat and Libyan official.
Libya was Africa’s third-largest producer before the conflict began, pumping 1.6 million barrels a day in January, according to Bloomberg estimates. Output has slumped to a “trickle,” the International Energy Agency said last month.
------------------Gabon strikes end
The strife in Libya and Yemen is the latest in a wave of uprisings that has toppled the leaders of Tunisia and Egypt and spread to Algeria, Bahrain, Oman and Syria. Brent has climbed 22 percent since the ouster of Tunisian President Zine El Abidine Ben Ali on Jan. 14.
Companies including Total SA operating in the West African nation of Gabon resumed production after a strike. “We should get back to normal production by today,” Phenelope Semavoine, a Paris-based spokeswoman for Total, said by phone.
Royal Dutch Shell Plc, Tullow Oil Plc and Vaalco Energy Inc. also said output was returning to normal. Crude output in Gabon averaged 240,000 barrels a day in 2010, the International Energy Agency said on March 15.
Crude stockpiles in the U.S. increased 0.3 percent in the seven days ended April 1 from 355.7 million a week earlier, according to the median of nine analyst estimates before the report tomorrow. Eight of the respondents forecast a gain and one a decline. The industry-funded American Petroleum Institute will publish its own data on Tuesday.
Stockpiles at Cushing, Oklahoma, where New York contracts are delivered, surged to a record last month. U.S. gasoline demand was 2 percent below last year’s level in the last week of March, according to U.S. government data.
Inventories of distillate fuel, a category that includes heating oil and diesel, probably increased 500,000 barrels from 153.3 million, the survey showed.
(Source: Bloomberg)