Oil Climbs From Two-Week Low on U.S. Stockpiles, Saudi Violence

Oil rose from the lowest price in two weeks as a surprise drop in U.S. stockpiles and violence in Saudi Arabia countered concern that Europe’s debt crisis will threaten the economy.

New York futures gained as much as 0.6 percent after earlier swinging between gains and losses. Crude inventories declined last week to the lowest since January 2010, according to an Energy Department report yesterday. Saudi Arabia said four people were killed in violence in the kingdom’s eastern province, the official Saudi Press Agency reported. Oil dropped to the lowest since Nov. 9 yesterday after Germany failed to find buyers for 35 percent of bonds at an auction.

“The decrease in inventory is going to be a supportive factor to keep crude oil from losing too much ground,” said Ken Hasegawa, a commodity-derivatives trading manager at Newedge Group in Tokyo. “One hundred dollars is not far from now but I really doubt it will exceed the recent high of around $103.”

Crude for January delivery rose as much as 61 cents to $96.78 a barrel in electronic trading on the New York Mercantile Exchange. It was at $96.76 at 3:49 p.m. Singapore time. The contract earlier lost as much 53 cents. Prices have gained 5.9 percent this year.

Floor trading is closed today for the U.S. Thanksgiving holiday and electronic transactions will be booked with tomorrow’s trades for settlement purposes.

Brent oil for January settlement on the London-based ICE Futures Europe exchange was at $107.81 a barrel, up 79 cents. The European benchmark crude was at a premium of $10.96 to New York-traded West Texas contracts. The spread reached a record $27.88 on Oct. 14.

Moving Average

U.S. crude’s 200-day moving average is at $95.50 a barrel today, according to data compiled by Bloomberg. Buy orders tend to be clustered near chart-support levels. The market may extend losses to $90 “within this month” if futures settle below this indicator, said Hasegawa at Newedge.

U.S. crude stockpiles fell 6.22 million barrels in the week ended Nov. 18 to 330.8 million barrels, according to yesterday’s Energy Department report. That’s the biggest drop in nine weeks. Supplies were expected to climb 500,000 barrels, based on the median estimate of 13 analysts surveyed by Bloomberg News.

Distillate-fuel stockpiles declined 770,000 barrels to 133 million, the lowest since December 2008, the report showed. Stockpiles were down for an eighth week. Gasoline inventories surged 4.48 million barrels, the most since January.

Goldman Sachs

Goldman Sachs Group Inc. yesterday raised its forecast for West Texas crude to $102 a barrel for the first quarter. The bank cited a Nov. 14 announcement by Enbridge Inc. that it would reverse the Seaway pipeline to boost the flow of oil from Cushing to the Gulf of Mexico. The storage hub in Oklahoma is the delivery point for New York-traded crude futures.

The European Union accounted for 16 percent of world oil demand in 2010, according to BP Plc’s annual Statistical Review of World Energy. The U.S. consumed 19.1 million barrels a day, or 21 percent of the global total.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net;

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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