Oil Near Three-Week High After Surge in German Factory Orders

Oil traded near its highest in three weeks in New York, erasing earlier losses as a surge in German manufacturing tempered concern that Standard & Poor’s may cut the credit ratings of European nations.

West Texas Intermediate was little changed after recouping a loss of 0.6 percent. German factory orders rose the most in 19 months in October after three straight declines. Standard & Poor’s said yesterday it may strip Germany and France of their AAA ratings as it weighs downgrades for 15 nations. U.S. gasoline and distillate stockpiles rose last week while crude supplies shrank, according to a Bloomberg News survey.

“S&P’s announcement relates more to the outlook for a rating downgrade than a real downgrade” said Hannes Loacker, an analyst at Raiffeisen AG in Vienna, who predicts WTI will average $82 a barrel in the first quarter. “The market is getting a bit more optimistic about recent rescue measures and the willingness for solving the European debt crisis.”

Crude for January delivery advanced as much as 32 cents to $101.31 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.03 at 1:17 p.m. London time. Yesterday, the contract gained 3 cents to $100.99, the highest settlement since Nov. 16. Futures are up 11 percent this year after rising 15 percent in 2010.

Brent oil for January settlement on the London-based ICE Futures Europe exchange rose 18 cents, or 0.2 percent, to $109.99 a barrel. The European benchmark contract was at a $8.95 premium to New York-traded West Texas grade, compared with $8.82 yesterday and a record $27.88 on Oct. 14. Brent last closed at a discount to WTI in August 2010.

German Manufacturing

Factory orders in Germany, adjusted for seasonal swings and inflation, jumped 5.2 percent from September, when they dropped 4.6 percent, the Economy Ministry in Berlin said in a statement today. Economists in a Bloomberg News survey had forecast a 1 percent increase for October.

The euro area’s six AAA rated countries are among nations to be placed on a negative outlook and their credit ratings may be cut depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday.

The European Union accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy. The U.S., the world’s biggest oil user, consumed 19.1 million barrels a day, or 21 percent of the total.

U.S. Inventories

U.S. gasoline inventories probably climbed 1 million barrels in the week ended Dec. 2 and supplies of distillates, which include heating oil and diesel, increased 1.1 million barrels, based on the median estimate of nine analysts surveyed by Bloomberg News before an Energy Department report tomorrow.

Crude stockpiles probably fell 1 million barrels as refineries ended seasonal maintenance and boosted run rates, the survey shows. The industry-funded American Petroleum Institute in Washington will release its own supply data today.

U.S. crude will average $100 a barrel in 2012 and is more likely to rise above that level than fall below it, ConocoPhillips Chief Executive Officer Jim Mulva said.

“A $100 oil price certainly promotes investment by the industry, and it’s also a price that doesn’t frustrate growth and development in the economy,” he said in an interview today in the Qatari capital Doha. “I see there is more potential for upside and a higher price than downside.”

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