Crude Oil Trades Near Highest in Three Weeks on Demand Signs

Oil traded near the highest in three weeks as signs of economic recovery in the U.S. stoked speculation fuel demand will increase in the world’s biggest crude consumer.

Prices erased losses earlier today as cold weather boosted heating demand and disrupted transport in Europe. A government report tomorrow may show the U.S. added 145,000 jobs last month, according to a Bloomberg News survey of economists. Payrolls rose while the country’s manufacturing expanded for a 16th straight month, according to data released yesterday.

“The U.S. data was very supportive for prices,” said Serene Lim, a commodity analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “People are expecting that the payroll report to be quite positive so that should boost oil prices also.”

The January contract was at $86.81 a barrel, up 6 cents in electronic trading on the New York Mercantile Exchange at 4:26 p.m. Singapore time. Yesterday, it rose $2.64 to close at $86.75, the highest settlement since Nov. 11.

Crude’s “fair price” is $100 a barrel, Venezuelan Energy Minister Rafael Ramirez said in Doha today, adding that the Organization of Petroleum Exporting Countries is unlikely to change its output quotas at its meeting later this month. Oil gained 3.3 percent last month and is 9.4 percent higher this year.

Brent crude for January settlement was at $89.08 a barrel, up 21 cents, on the London-based ICE Futures Europe exchange. The contract rose $2.95, or 3.4 percent, to $88.87 yesterday.

Global Demand

Global economic growth with drive New York crude futures to an average $110 a barrel in 2012, up from a forecast of $100 a barrel next year, Goldman, Sachs & Co. said in a report yesterday.

Crude trimmed some of yesterday’s 3.1 percent gain earlier today after Energy Department data showed U.S. fuel consumption declined for a third week and oil supplies unexpectedly rose a second week.

U.S. fuel demand, in terms of products supplied to refiners, dropped 1.8 percent to 18.5 million barrels a day in the week ended Nov. 26, the lowest in six weeks, the Energy Department said. Crude stockpiles increased by 1.07 million barrels. They were forecast to decrease by 1.15 million barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Gasoline inventories climbed last week while distillate fuel supplies, including diesel and heating oil, slipped. Crude stockpiles at Cushing, Oklahoma, the delivery point for New York oil futures, jumped 2.7 percent to 34.5 million barrels.

The Cushing gains have increased the discount between January New York futures and London’s Brent contract to $2.30 a barrel today compared with $1.05 a month ago.

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