Crude Gains as IEA Sees Rising Demand; OPEC Keeps Quota

Brent crude rose to a five-day high after the International Energy Agency increased its oil demand forecast for 2013 and as OPEC ministers completed their meeting in Vienna to discuss production limits.

Futures climbed as much as 1.2 percent in London, a third straight advance. Global oil consumption will expand to 90.5 million barrels a day next year, more than previously forecast, amid signs of a rebound in Chinese demand, the IEA said in a report today. OPEC will maintain its output ceiling at 30 million barrels a day, Saudi Arabian Oil Minister Ali Al-Naimi said after the closed-door talks concluded.

“Most member states in the exporting group are happy with the current market balance and price levels, while fearing that falling production could see a further price rise and hurt already struggling demand growth into 2013,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by e- mail.

Brent for January settlement added as much as $1.27 to $109.28 a barrel on the London-based ICE Futures Europe exchange, the highest since Dec. 5. Futures were at $109.14 as of 1:53 p.m. local time. West Texas Intermediate for January delivery was at $86.23 a barrel, up 44 cents, in electronic trading on the New York Mercantile Exchange, leaving it $22.89 a barrel below Brent.

Oil in New York has technical support along an upward- sloping trend line on the daily chart, at about $85.73 a barrel today, according to data compiled by Bloomberg. A sustained drop below this line, which connects the intraday lows of June and November, will signal a so-called downside breakout, when losses tend to accelerate.

Rising Consumption

Global consumption in the final three months of 2012 will average 90.5 million barrels a day, about 435,000 barrels, or 0.5 percent, more than previously forecast, the Paris-based IEA said in a monthly report today.

“Markets have grown somewhat more optimistic about the Chinese economy as confidence indicators recently turned expansionary after a long period in the doldrums,” the IEA said.

The Organization of Petroleum Exporting Countries’ meeting was its second this year. The group decided to extend Abdalla El-Badri’s term as Secretary-General by one year, al-Naimi said.

While OPEC’s own forecasts show that it’s pumping more than consumers need, Saudi Arabia, Iraq, Iran, the United Arab Emirates, Angola, Ecuador and Libya have indicated that supply and demand are approximately in balance.

Falling Output

Total production from all 12 OPEC nations slid to an 11- month low of 30.78 million barrels a day last month, according to a monthly report from the group yesterday that cited secondary sources for its data. That’s still above the official cap and about 1.03 million barrels a day more than the projected average demand for OPEC crude next year.

“The Saudis will do as they always do and cut production further going into next year to protect prices at $90 to $110” for Brent, Torbjoern Kjus, a senior oil analyst at DNB ASA (DNB) in Oslo, said by phone before today’s decision.

An Energy Department report today may show crude supplies shrank by 2.5 million barrels, according to a Bloomberg News survey. Crude inventories grew by 4.27 million barrels last week, the most since August, data from the American Petroleum Institute showed.

Gasoline stockpiles in the U.S. increased by 2.76 million barrels last week, the API data showed. They are forecast to rise by 2 million in the government report, according to the median estimate of 11 analysts in the Bloomberg News survey. Distillate inventories, a category that includes diesel and heating oil, rose by 2.24 million barrels compared with an estimate for the Energy Department data of 1.1 million.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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