Futures climbed as much as 1.6 percent after the IEA raised fourth quarter and 2013 consumption estimates on signs of a demand rebound in China, the world’s second-largest oil user. OPEC maintained output levels for a second time this year. Oil extended gains after the Federal Reserve expanded its asset- purchase program.
“The IEA’s demand revision is clearly a very bullish move, and it suggests maybe the economy is better than people thought, especially China,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People have been expecting that there will be no change in OPEC production.”
Crude for January delivery rose $1.23, or 1.4 percent, to $87.02 a barrel at 12:39 p.m. on the New York Mercantile Exchange. Prices, which touched $87.20 in intraday trading, are down 12 percent this year. They are heading for the first annual decrease since 2008.
Futures rebounded yesterday after declining for five days, the longest streak of losses since Oct. 24. Futures breached a technical resistance level at $86.70, an indicator that prices may increase further, said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
“Oil is on the bottom part of the range and buyers are coming back to the market,” he said. “The IEA boosts its demand forecast, and it’s supportive for prices.”
Brent for January settlement on the London-based ICE Futures Europe exchange gained $1.94, or 1.8 percent, to $109.93 a barrel.
Global oil 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. Demand will expand by 865,000 barrels a day in 2013 to 90.5 million, adding 110,000 barrels to a previous outlook.
“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 in the report.
OPEC, which pumps about 40 percent of the world’s oil, kept its production limit at 30 million barrels a day, a level it now exceeds, according to estimates from the group and from Bloomberg.
Production from all 12 OPEC nations slid to an 11-month low of 30.78 million barrels a day last month, OPEC’s monthly report showed yesterday, citing secondary sources for the 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, according to the report.
OPEC pumped 31.5 million barrels a day in November, according to Bloomberg estimates.
Oil also advanced after the Fed said it will buy $45 billion a month in Treasury securities to help boost economic growth. The Fed’s plan for Treasury purchases matched the forecast of economists in a Bloomberg survey.
The Standard & Poor’s 500 Index increased for a sixth day.
Crude reduced gains after the Energy Department said supplies rose 843,000 to 372.6 million in the week ended Dec. 7. Inventories were forecast to decrease 2.5 million barrels, according to a Bloomberg survey.
Stockpiles of gasoline grew 5 million barrels to 217.1 million, the most since April 6. They were forecast to increase 2 million barrels, according to the survey.
Supplies of distillate fuels, including heating oil and diesel, rose 3 million barrels to 118.01 million. They were expected to grow 1.1 million.
“We have bearish numbers across the board and we saw a downward reaction in prices,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Gasoline is looking oversupplied and at some point it might be reasonable to conclude that it’s a bear market.”
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