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Oil Little Changed as Europe’s Economy Limits This Week’s Gain

Oil was little changed in New York as rising U.S. stockpiles and signs that Europe’s economy is worsening put a limit on a weekly advance driven by speculation that sanctions would curb the supply of crude from Iran.

Futures vacillated between gains and losses after the Energy Department said U.S. crude stockpiles climbed 2.2 million barrels last week. A median decline of 1 million barrels was forecast in a Bloomberg News survey of analysts. Reports today may show that European consumer confidence slumped to the lowest level in two years and factory orders fell, according to economists. Oil has gained 2.9 percent this week on concern sanctions against Iran will limit supplies.

“The bigger issues are the geopolitical crisis with Iran and the European debt crisis, pushing and pulling against the market,” said Anthony Nunan, a senior adviser for risk management at Mitsubishi Corp. in Tokyo, who described the U.S. stockpile data as bearish. “We had an overreaction to the upside and people are coming back to the reality that the European crisis will still be a big drag on the economy.”

Crude for February delivery was at $101.90 at 3:45 p.m. Singapore time. Yesterday, the contract dropped $1.41 to $101.81, the lowest settlement this week. Prices gained 8.2 percent in 2011.

Brent oil for February settlement on the London-based ICE Futures Europe exchange rose 0.1 percent, to $112.87 a barrel. The European benchmark contract was at a $10.95 premium to New York-traded West Texas Intermediate crude. The spread was a record $27.88 on Oct. 14.

Iran Sanctions

Brent’s premium has widened from $7.93 a barrel on Dec. 27 amid heightened tension over sanctions aimed at curbing Iran’s nuclear program. The country, the third-largest oil exporter globally, has threatened to shut the Strait of Hormuz, a transit route for a fifth of the world’s crude.

Italian Prime Minister Mario Monti yesterday questioned the scope and timing of possible European Union sanctions against Iran, raising an obstacle to stiffer penalties.

The EU is working to halt oil purchases from Iran, U.S. State Department spokeswoman Victoria Nuland said. European foreign ministers aim to announce harsher penalties on the Persian Gulf nation’s energy and banking industries at a meeting Jan. 30, according to EU spokesman Michael Mann.

‘Shooting Star’

Oil in New York may fall next week on speculation Iran won’t block the Strait of Hormuz and concern that Europe will struggle to contain its debt crisis, a Bloomberg News survey showed. Fifteen of 32 analysts and traders, or 47 percent, forecast futures will decrease through Jan. 13. Fourteen predicted prices will rise.

West Texas Intermediate futures may decline as price movements this week have created a “shooting star” on the candlestick chart, a bearish technical formation, according to data compiled by Bloomberg. Stochastic oscillators also remain above a reading of 70, signaling crude is overbought.

Gasoline stockpiles in the U.S., the world’s biggest oil consumer, rose 2.48 million barrels in the week ended Dec. 30, the Energy Department report also showed. Supplies were forecast to gain 1 million barrels, according to the median estimate of 13 analysts surveyed by Bloomberg News. Distillate-fuel inventories, which include heating oil and diesel, were up 3.22 million barrels, more than three times the estimated increase of 1 million barrels.

Gasoline supplies in independent storage climbed to the highest level in almost six months in the European hub of Amsterdam-Rotterdam-Antwerp, according to PJK International BV. Stockpiles rose 14 percent to 706,000 metric tons in the week to yesterday, the researcher in Breda, Netherlands, said yesterday.

Retail sales in the euro zone dropped 0.4 percent in November and consumer confidence fell to the lowest in more than two years last month, according to Bloomberg surveys before reports today. Factory orders in Germany, the Europe’s largest economy, slid 1.8 percent in November, another survey showed.

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