Oil rebounded from the lowest close in almost a month in New York as German investor confidence jumped in December on speculation Europe’s largest economy will gather momentum next year.
Futures rose as much as 1 percent after falling for a fifth day yesterday, the longest losing streak since October. The ZEW Center for European Economic Research said its index of investor and analyst expectations climbed to 6.9 from minus 15.7 in November. U.S. crude inventories declined 2.5 million barrels last week, according to a Bloomberg News survey. Industrial output in China rose faster than economists estimated, official data showed Dec. 9.
“Oil demand in China is in better shape than it seemed before,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by phone. “U.S. crude inventories are expected to drop and increased German investor confidence could extend the upward move.”
West Texas Intermediate crude for January delivery gained as much as 81 cents to $86.37 a barrel and was at $86.20 in electronic trading on the New York Mercantile Exchange as of 1:22 p.m. London time. The contract slid 37 cents to $85.56 yesterday, the lowest close since Nov. 15. Prices have fallen 13 percent this year and are headed for the first annual decrease since 2008.
Brent for January settlement on the London-based ICE Futures Europe exchange was at $108.19 a barrel, up 86 cents. The European benchmark crude was little changed at a premium of $21.92 to WTI, near the widest in more than a week.
Crude stockpiles are expected to have shrunk 0.7 percent as refineries boosted fuel production, the Bloomberg survey before tomorrow’s Energy Department report showed. U.S. distillate inventories probably increased 1.5 million barrels and gasoline supplies may have gained 2 million barrels to 214.1 million.
The American Petroleum Institute in Washington will release separate inventory data today. The industry group collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Economists forecast a gain to minus 11.5 in the ZEW index, which aims to predict economic developments six months in advance. German economic growth slowed to 0.2 percent in the third quarter from 0.3 percent in the second as the euro area slipped into recession for the second time in four years.
Factory production in China climbed 10.1 percent in November from a year earlier and retail sales grew 14.9 percent, the biggest gains since March, government data showed Dec. 9.
The Organization of Petroleum Exporting Countries reduced output to the lowest in one year in November as Saudi Arabia, the group’s biggest producer, pumped the least in 13 months amid speculation that global growth will slow and curb oil demand.
Supply from OPEC, which accounts for about 40 percent of the world’s crude, dropped by 0.7 percent to 30.78 million barrels a day last month, the organization said today in an e-mailed report. Saudi Arabia pumped 9.67 million barrels in November, OPEC said, citing secondary sources.
The group is gathering in Vienna tomorrow to determine the group’s targets for crude production. OPEC is expected to maintain its output quota at 30 million barrels a day, according to a Bloomberg survey of 18 analysts published last week.
“The market needs a clear statement or action from the Saudis that they will cut production to the already agreed upon quota.” said Filip Petersson, a commodities strategist at SEB AB in Stockholm.
The 12-member group estimated demand for its crude at 29.75 million barrels a day in 2013. The International Energy Agency in Paris on Nov. 13 predicted the so-called “call on OPEC” at 29.8 million barrels.
OPEC may temporarily extend the role of Secretary General Abdalla El-Badri as talks on a successor remain in deadlock, according to two people familiar with the matter. The meeting is scheduled to select a replacement for the Libyan, whose second three-year term ends Dec. 31.