Crude Oil Increases Near Three-Month High as Berlusconi Agrees to Resign

Oil rose to a three-month high after Italian Prime Minister Silvio Berlusconi agreed to resign following parliament’s approval of an austerity plan.

Futures climbed 1.3 percent on optimism a new leader will be able to contend with the debt crisis. A United Nations report on Iran’s nuclear plans threatening Middle East stability also helped boost prices.

“The departure of Berlusconi is being looked at as a positive development,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This may mean that a resolution to the fiscal crisis is closer. I’m not sure this will have any long-term impact but it sure is having one today.”

Crude oil for December delivery rose $1.28 to $96.80 a barrel on the New York Mercantile Exchange, the highest settlement since July 28. Futures are up 5.9 percent this year.

Prices dropped from the settlement as the industry-funded American Petroleum Institute reported at 4:30 p.m. that U.S. stockpiles rose 148,000 barrels to 340 million last week. December oil was up $1.48, or 1.6 percent, to $97 a barrel in electronic trading at 4:32 p.m.

Brent oil for December settlement increased 44 cents, or 0.4 percent, to $115 a barrel on the London-based ICE Futures Europe exchange. The European benchmark settled at its highest level since Sept. 15.

Futures in New York settled above the 200-day moving average for the first time since July 29, a signal for technical traders to purchase contracts. The 200-day average was $94.93.

Italian President Giorgio Napolitano, who held talks with Berlusconi, said in an e-mailed statement that the prime minister agreed to resign. Napolitano didn’t say when the vote on the austerity measures, which was tentatively slated for next week, will take place.

Equities, Euro

U.S. stocks and the euro rose on the Berlusconi announcement. The Standard & Poor’s 500 Index rose 1.2 percent to 1,275.92, and the Dow Jones Industrial Average (INDU) climbed 0.8 percent to 12,170.18.

The euro advanced 0.4 percent to $1.3835. A stronger common currency and a weaker dollar boost the appeal of raw materials as an alternative investment.

Iran carried out “work on the development of an indigenous design of a nuclear weapon including the testing of components,” the International Atomic Energy Agency said today in a 15-page restricted document obtained by Bloomberg News.

The report, which draws on eight years of collected evidence, shows that Iran worked to redesign and miniaturize a Pakistani nuclear-weapon design by using a web of front companies and foreign experts, according to the document and an international official familiar with the IAEA’s investigation.

Iranian Premium

“We’ve gained $3 to $5 recently just on the Iran situation,” said Michael Wittner, the head of oil-market research at Societe Generale SA in New York. “This will continue to support prices in the very short term.”

Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. About 15.5 million barrels of oil a day, the equivalent of about a sixth of global consumption, flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department.

OPEC raised estimates for global oil demand to 2015 after a swifter-than-forecast economic rebound. Worldwide consumption will increase by 5.3 percent to 92.9 million barrels a day in the next four years, led by emerging Asian economies, the group said today in its annual World Oil Outlook. The 2015 estimate is 1.9 million barrels more than last year’s forecast.

Cushing Stockpiles

Oil also rose on falling supplies in Cushing, Oklahoma, the delivery point for West Texas Intermediate, the grade traded in New York.

Stockpiles held in floating-roof tanks at the Cushing hub dropped by 1.32 million barrels to 28.3 million on Nov. 3 from Nov. 1, according to data compiled by DigitalGlobe Inc. in Longmont, Colorado. The Energy Department said last week that Cushing inventories, including floating and fixed tanks, totaled 32.1 million barrels as of Oct. 28. The API report showed Cushing inventories at 31.2 million barrels on Nov. 4.

An Energy Department report tomorrow will probably show that U.S. inventories of distillate fuel, a category that includes heating oil and diesel, fell 2.2 million barrels last week to 139.7 million, according to the median estimate of 13 analysts surveyed by Bloomberg News. A drop of that size would leave inventories at the lowest level in 31 months. The API report showed those inventories at 141.6 million on Nov. 4.

“The U.S. petroleum data has been supportive recently,” said Kyle Cooper, director of research for IAF Advisors in Houston. “Given where supplies are, the mid-$90s are looking like a fair level.”

Price Forecast

The Energy Department increased its oil price forecast for 2011 to an average $93.80 a barrel from the October projection of $92.36, according to its monthly Short-Term Energy Outlook released today. Prices have averaged $94.55 so far this year.

Oil volume in electronic trading on the Nymex was 566,337 contracts as of 4:32 p.m. in New York. Volume totaled 625,462 contracts yesterday, 8.3 percent below the three-month average. Open interest was 1.34 million contracts.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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