Oil rose for a second day in New York before data forecast to show that crude supplies declined a second week in the U.S., the largest consumer of the commodity.
The U.S. Energy Department may say tomorrow U.S. crude supplies dropped by 3 million barrels last week as a result of storms in the Gulf of Mexico, according to a Bloomberg survey. Oil extended its advance in New York as the dollar reversed gains and U.S. stock index futures pared their declines. Brent pared earlier gains in London after the International Energy Agency, an adviser on energy policy to 28 nations, reduced its estimate of 2012 global oil demand by 400,000 barrels a day.
“This is a market that’s been tightening for the past 12 to 15 months,” David Fyfe, head of the IEA’s industry and markets division, said in a telephone interview from Paris. “This year the tightening has been more about supply outages than demand.”
Crude for October delivery advanced as much as $1.74, or 2 percent, to $89.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded for $89.77 at 1:48 p.m. London time. Prices have risen 16 percent in the past year.
Brent oil for October settlement was up 39 cents at $112.64 a barrel on the London-based ICE Futures Europe Exchange after gaining as much as $1, or 0.9 percent, to $113.25 a barrel. Yesterday Brent fell to $110.42, the lowest since Sept. 6.
The European benchmark contract closed at a premium of $24.06 to U.S. futures yesterday, the smallest since Aug. 23 and down from a record close of $26.87 on Sept. 6. The spread is at $22.87 a barrel today.
The October Brent contract was at a premium of $2.25 a barrel to the November future, the most since June 15. This market structure, where prompt supplies are more expensive than later deliveries, is known as backwardation and signals demand for near-term supplies is greater than for future shipments.
German Chancellor Angela Merkel said that Greece is taking the right steps to get its next bailout payment, warning against allowing a Greek default because of the risk of contagion for other euro-area countries.
The Paris-based IEA said that demand worldwide will rise by 1.2 percent to 89.3 million barrels a day this year, and by 1.6 percent to 90.7 million in 2012. The full resumption of exports from Libya will be “long and difficult,” it said.
The Energy Department report may show U.S. crude inventories slid 3 million barrels last week, according to the median of 10 analyst estimates in a Bloomberg News survey. Gasoline supplies probably fell 500,000 barrels, the survey shows. The industry-funded American Petroleum Institute will report its own data today.
Output in the Gulf of Mexico, which accounts for 27 percent of U.S. supply, was cut 61 percent last week after Tropical Storm Lee shut production platforms.