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Oil Climbs a Third Day on U.S. Economy, Shrinking Crude Supplies

Oil climbed for a third day in New York as investors bet that fuel demand may increase amid signs of an economic recovery and declining stockpiles in the U.S., the world’s biggest crude consumer.

Futures advanced as much as 1.2 percent after data from the American Petroleum Institute showed crude inventories dropped to the lowest in almost two years. The Energy Department today may say supplies fell 2.13 million barrels, according to a Bloomberg News survey. The February contract surged 3.4 percent yesterday on U.S. housing data that beat estimates, unexpected growth in German business confidence and indications that shipments from Iran may be curbed.

“Economic data is painting a better global growth scenario, and that’s clearly feeding into firmer oil prices,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney who predicts New York futures will settle between $99 and $102 a barrel at the end of the year. “We’ll be watching the inventory data tonight following the API.”

Crude for February delivery rose as much as $1.20 to $98.44 a barrel in electronic trading on the New York Mercantile Exchange. It was at $98.12 at 3:53 p.m. Singapore time. The contract yesterday climbed $3.19 to $97.24. Front-month futures are up 9.2 percent this year after gaining 15 percent in 2010.

Brent oil for February settlement on the London-based ICE Futures Europe exchange rose as much as 84 cents, or 0.8 percent, to $107.57 a barrel. The European benchmark contract was at a premium of $9.35 to New York-traded West Texas Intermediate grade. The spread was a record $27.88 on Oct. 14.

Oil Stockpiles

U.S. crude inventories fell to 330 million barrels last week, the lowest since the period ended Jan. 22 last year, the industry-funded API said yesterday.

Gasoline stockpiles decreased 394,000 barrels to 213.9 million, based on the API data. The Energy Department report may show supplies probably climbed 1.5 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg News. Distillate-fuel stockpiles, including heating oil and diesel, are expected to have declined 750,000 barrels.

The Energy Department will release its weekly report at 10:30 a.m. in Washington today.

Oil in New York has technical resistance along the middle Bollinger Band, around $98.20 a barrel today, according to data compiled by Bloomberg. Sell orders tend to be clustered near chart-resistance levels.

Housing Starts

Home builders in the U.S. broke ground in November on more houses than at any time in the past 19 months. Housing starts increased 9.3 percent to an annual rate of 685,000, the highest since April 2010, a Commerce Department report showed yesterday. A median 635,000 gain was forecast by 79 economists surveyed by Bloomberg News.

The Ifo institute’s business climate index in Germany, based on a survey of 7,000 executives, rose in November, the Munich-based group said yesterday. Economists predicted a drop, a Bloomberg News survey showed. Germany is Europe’s largest economy.

Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, will probably stockpile more crude at sea as foreign buyers avoid the country’s oil amid the prospect of renewed international sanctions, according to JBC Energy GmbH, a Vienna-based consultant.

European Union foreign ministers are scheduled to meet next month to discuss possible sanctions on Iranian oil supplies. The U.S. approved new restrictions on the country’s oil industry and banking system Nov. 21 to deter buyers of Iranian crude and thwart its nuclear program.

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