Brent crude rose for a second day in London, gaining more than $1, after an industry report showed stockpiles fell the most in more than three months in the U.S., the world’s biggest oil consumer.
Futures increased as much as 1.1 percent after closing $1.20 a barrel higher yesterday. U.S. crude supplies dropped by 4.1 million barrels in the seven days ended Dec. 14, the most since the week to Aug. 31, data from the American Petroleum Institute showed. A U.S. government report today may say inventories fell by 1.75 million barrels, according to a Bloomberg News survey. Oil has advanced this week amid speculation that U.S. lawmakers will agree on steps to avert tax increases and spending cuts known as the fiscal cliff.
“There is increasing optimism that the U.S. will solve the fiscal cliff issue, and that is driving prices up,” Thina Saltvedt, an analyst at Nordea Bank AB, said today by e-mail. “That’s been the main driver in the last few days, and in the short term the EIA inventory report today could have an impact, especially if it matches the direction of yesterday’s API.”
Brent for February settlement on the London-based ICE Futures Europe exchange was up 90 cents at $109.74 a barrel at 1:41 p.m. local time. The European benchmark crude rose as much as $1.16 and was at a premium of $20.99 to the corresponding WTI contract, from $20.44 yesterday. The volume traded for all Brent contracts was 11 percent below the average for the past 100 days. The front-month contract has risen 2.2 percent this year.
West Texas Intermediate crude for January delivery was at $88.32 a barrel, up 39 cents, in electronic trading on the New York Mercantile Exchange. The contract expires today. The more-actively traded February contract gained 37 cents to $88.77. Traded volume for all contracts was 9.8 percent below the average of the past 100 days. Front-month futures rose 0.8 percent yesterday to $87.93, the highest close since Dec. 4.
Oil in New York has fallen 11 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing, Oklahoma, the country’s largest storage hub and the delivery point for WTI. That has left it at an average discount of $17.42 a barrel to Brent this year, compared with a premium of about 7 cents in the five years through 2010.
More than $600 billion in spending cuts and tax increases are set to start in the U.S. in January unless an agreement to avert the measures is reached. House Speaker John Boehner said yesterday he will push a budget “plan B” measure that would include higher taxes for people earning more than $1 million, while continuing to negotiate with President Barack Obama.
“There’s a level of optimism creeping into the market about the fiscal cliff coming to an end,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “I don’t think there are any reasons for oil prices to come off at the moment.”
U.S. gasoline stockpiles climbed 4.2 million barrels last week, the API said. Supplies are forecast to rise 2 million barrels in today’s Energy Department report, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, decreased 1.9 million barrels, compared with a 1 million-barrel gain predicted in the survey.
The API 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 in Washington for its weekly survey.
Oil’s advance in New York may stall as prices approach technical resistance along the upper Bollinger Band, according to data compiled by Bloomberg. Futures halted rallies from mid-July to mid-September and in early December near this indicator, around $89.37 a barrel today. Sell orders tend to be clustered near chart-resistance levels.