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Oil Rises First Time in Six Days on German Confidence

Oil rose for the first time in six days as German investor confidence jumped in December.

Prices rebounded from a three-week low as confidence in Germany, the European Union’s biggest oil user, reached a seven- month high. The Organization of Petroleum Exporting Countries will probably leave its production quota unchanged when ministers meet tomorrow in Vienna, a Bloomberg survey showed.

“The improving German investor confidence put some support in the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “It’s also a result of the fact that we’ve been down five days in a row. The market is keeping an eye on tomorrow’s OPEC meeting to see if there is anything unexpected coming out of it.”

Crude for January delivery rose 23 cents, or 0.3 percent, to settle at $85.79 a barrel on the New York Mercantile Exchange. The contract dropped to $85.56 yesterday, the lowest close since Nov. 15. Prices are down 13 percent this year and are headed for the first annual decrease since 2008.

Prices were little changed after the American Petroleum Institute reported oil inventories increased 4.27 million barrels to 375.8 million last week. Crude rose 20 cents to $85.76 a barrel at 4:41 p.m. in electronic trading. It was at $86.01 before the report was released at 4:30 p.m.

Brent for January settlement on the London-based ICE Futures Europe exchange gained 68 cents, or 0.6 percent, to end the session at $108.01 a barrel.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in November. Economists forecast a gain to minus 11.5, according to the median of 38 estimates in a Bloomberg survey.

German Economy

ZEW’s gauge of the current economic situation rose to 5.7 from 5.4 in November.

“The German confidence reduced some concern about the European economy,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “No one is making big bets in this market before the OPEC meeting.”

The euro gained as much as 0.6 percent against the dollar on the German sentiment report. A stronger euro and weaker dollar increase dollar-denominated oil’s appeal as an investment alternative.

“The German confidence is one of the reasons supporting the market,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “We do have an OPEC meeting and we are kind of in a holding pattern right now.”

OPEC will probably maintain its production quota at 30 million barrels a day of oil, according to the Bloomberg survey.

Mohamed al-Hamli, the oil minister from the United Arab Emirates, said in Vienna today that there’s no need for OPEC to do anything as long as there is demand.

OPEC Output

OPEC crude output tumbled to the lowest level in 11 months in November as Saudi Arabia, the group’s biggest producer, pumped the least in 13 months, according to revised data in an e-mailed report from the group.

Supply from the 12-member organization, which pumps about 40 percent of the world’s crude, dropped by 0.7 percent to 30.78 million barrels a day last month, the lowest level since December 2011. That exceeds by 1.03 million barrels the amount of OPEC crude that will be required by world markets in 2013, the report showed.

The Energy Department will probably say tomorrow that U.S. gasoline inventories increased 2 million barrels in the week ended Dec. 7, according to a Bloomberg survey. Stockpiles jumped 7.86 million the previous week to 212.1 million as demand weakened.

Gasoline Supply

“The build in gasoline is really keeping this market down,” Baruch said. “People are really fearful of demand.”

Total products supplied, a measure of fuel demand, dropped 5.7 percent in the last two weeks of November, the Energy Department reported last week.

Crude stockpiles dropped 2.5 million barrels last week, the Bloomberg survey showed.

The Energy Department raised its crude-oil price projection for 2013 in its monthly Short-Term Energy Outlook today. West Texas Intermediate oil will average $88.38 a barrel next year, up from the $88.29 forecast last month, the Energy Information Administration, the department’s statistical arm, said. Brent will average $103.75, up from $103.38 last month.

The EIA increased its forecast for global oil consumption next year to 90 million barrels a day from 89.94 million in November. Demand will be 1.1 percent higher than this year’s average of 89.04 million.

Electronic trading volume on the Nymex was 419,171 contracts as of 4:42 p.m. Volume totaled 468,908 contracts yesterday, 9.7 percent lower than the three-month average. Open interest was 1.55 million.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

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

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