Oil Rises for a Fourth Day as U.S. Economic Recovery May Spur Fuel Demand

Crude rose for a fourth day as signs of U.S. economic recovery stoked speculation that fuel demand will increase in the world’s largest oil consumer.

Futures climbed as much as 0.5 percent to trade near the highest in two years before a report forecast to show the U.S. economy expanded more than estimated earlier. Holiday-season retail sales jumped, according to data released yesterday. Prices also gained after the American Petroleum Institute said crude inventories shrank a fourth week.

“Oil prices have been well supported above $80 a barrel since around October,” said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. in Singapore. “People are growing more confident that the U.S. is not entering a double dip recession.”

Crude oil for February delivery rose as much as 45 cents to $90.27 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.24 at 4:14 p.m. Singapore time. Prices have climbed 14 percent this year.

Yesterday, futures gained 1.1 percent to $89.82 a barrel, the highest settlement since Oct. 7, 2008. That was 2 cents below a long-term resistance level on technical charts, the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year.

U.S. GDP grew 2.8 percent in the third quarter, up from an estimate of 2.5 percent last month, based on the median forecast economists surveyed by Bloomberg before a Commerce Department report.

Crude Supplies

Prices gained after the industry-funded American Petroleum Institute reported yesterday that U.S. crude-oil supplies declined 5.8 million barrels to 342 million last week. Gasoline inventories dropped 2.9 million while middle distillates increased 16,000 barrels, the API said.

“There’s no doubt that we’ve seen a tightening in the market’s balance over the last few months,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said in a Bloomberg Television interview. “A lot of it does depend on what you see for the demand picture going forward.”

Crude also rose after U.S. holiday retail sales data, a key economic indicator, advanced. Same-store sales at a selection of U.S. retailers posted their biggest holiday jump, according to a chain-store sales index released yesterday by the New York-based International Council of Shopping Centers and Goldman Sachs Group Inc.

Heating Oil

The Department of Energy will release its own oil-inventory report in Washington today. The data may show U.S. crude stockpiles fell last week as refiners on the Gulf Coast reduced their assets for tax savings at the end of the year, according to a Bloomberg survey.

Supplies dropped 3.4 million barrels in the seven days ended Dec. 17 from 346 million, based on the median estimate of 14 analysts. Stockpiles in the previous week slumped 9.85 million as imports fell.

Gasoline inventories may have increased 1.5 million barrels from 214.8 million, the survey showed. Analysts were split over whether stockpiles of distillate fuel, a category that includes heating oil and diesel, declined or gained.

Brent crude oil for February settlement rose as much as 46 cents, or 0.5 percent, to $93.66 a barrel on the London-based ICE Futures Europe exchange. It gained 46 cents, or 0.5 percent, to end the session at $93.20 a barrel yesterday, the highest settlement since Oct. 1, 2008.

To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net