Oil Pares Second Monthly Gain After U.S. Crude, Distillate Stockpiles Rise

Oil fell from the highest price in two weeks, paring a second monthly gain, as signs of rising U.S. stockpiles countered optimism about the economy of the world’s biggest crude consumer.

Futures slid as much as 0.8 percent after increasing for the past three days. The industry-funded American Petroleum Institute said inventories climbed by 3.44 million barrels last week. Prices rose yesterday after U.S. consumer confidence climbed the most in more than eight years and Iranian protesters vandalized the British Embassy’s compound in Tehran, stoking speculation that tension in the Middle East may escalate and threaten crude supplies.

“We’ve got profit-taking today off the rally driven by the attack on the U.K. embassy,” said Victor Shum, a senior principal at Purvin & Gertz Inc., a consultant in Singapore. “That provided support on top of the good economic data out of the U.S. The API data poured some cold water on that bullish news.”

Crude for January delivery slid as much as 83 cents to $98.96 a barrel in electronic trading on the New York Mercantile. It was at $99.14 at 3:57 p.m. in Singapore. The contract yesterday advanced 1.6 percent to $99.79, the highest close since Nov. 16. Prices are 6.4 percent higher this month, after climbing 18 percent in October, and up 18 percent from a year ago.

$100 Brent

Brent oil for January settlement was down 64 cents at $110.18 a barrel on the London-based ICE Futures Europe exchange. It closed yesterday up 1.7 percent at $110.82. The European benchmark contract’s premium to New York’s West Texas Intermediate was at $11.04, compared with yesterday’s close of $11.14 and a record $27.88 on Oct. 14.

Brent may average $100 a barrel next year as Libyan supply returns and new projects start, Hussein Allidina, an analyst at Morgan Stanley in New York, said in a report yesterday. Prices may be “significantly weaker” in the first half of next year, falling to as low as $85, the note said.

U.S. crude inventories rose to 339.2 million barrels as imports surged 10 percent in the week to Nov. 25, the API report showed. An Energy Department report today will probably show supplies increased 50,000 barrels, according to the median of response to a Bloomberg News survey.

Gasoline stockpiles slipped 173,000 barrels to 209.4 million in the API report. Distillate fuels, including diesel and heating oil, gained 1.35 million barrels to 139.5 million. Oil-product imports increased 8.5 percent, the group said.

Motor-fuel supplies probably climbed 1.45 million barrels in the Energy Department report, the Bloomberg survey showed. Distillates may have declined 1.25 million, the respondents said. The department is scheduled to release its inventory data today at 10:30 a.m. in Washington.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net

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

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