Oil dropped as accelerating Chinese inflation bolstered concern that economic stimulus may be curbed. The spread between crude in New York and London narrowed to the least in almost four months.

Futures fell as much as 1.2 percent after the Chinese government said prices rose the most in seven months. The discount of West Texas Intermediate oil traded in New York to London’s Brent shrank after Enterprise Products Partners LP and Enbridge Inc. completed the Seaway pipeline expansion, providing an outlet for record supplies in the central U.S.

The Chinese consumer price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. China, the largest oil-consuming country after the U.S., accounted for 11 percent of global demand in 2011, according to BP Plc’s Statistical Review of World Energy.

Crude oil for February delivery fell to $92.65 a barrel on the New York Mercantile Exchange. Prices settled at $93.82 yesterday, the highest level since Sept. 18.

Brent oil for February settlement declined $1.64, or 1.5 percent, to $110.25 a barrel on the London-based ICE Futures Europe exchange. Volume was 39 percent above the 100-day average. The grade is down 1 percent this week.

Gold fell for the second time in three days as inflation in China topped economist estimates, increasing concern that officials may curb stimulus.

China’s inflation accelerated to a seven-month high in December, the National Bureau of Statistics said today. Bullion climbed 7 percent last year, a 12th straight gain, as central banks in Europe, the U.S. and China increased stimulus measures to boost economies. The Asian country is the world’s biggest bullion buyer after India.

Gold futures for February delivery dropped to $1,655.40 an ounce on the Comex in New York. A close at that price would be the biggest loss since Jan. 4. Yesterday, the price touched $1,678.80, the highest in a week.

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1:00 U.S. FOMC Member Narayana Kocherlakota -