West Texas Intermediate crude advanced as U.S. retail sales rose more than forecast and on estimates that oil inventories dropped for a seventh week.
Prices climbed 0.9 percent. Purchases increased 0.2 percent last month, the Commerce Department reported, surpassing the 0.1 percent gain projected by economists surveyed by Bloomberg. Crude supplies probably fell to a four-month low, according to a Bloomberg survey before a government report tomorrow. WTI dropped 8.5 percent in the previous 10 days.
“The retail sales report was good, and the market is in a bullish mood,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The market’s been down for a while, and today people are buying back in. It will be a big test to see what happens with the inventory report tomorrow.”
WTI for February delivery rose 79 cents to settle at $92.59 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 25 percent above the 100-day average at 3:03 p.m. Prices have fallen in eight of the 11 days since they topped $100 on Dec. 27.
Futures maintained the advance after the American Petroleum Institute said U.S. crude inventories fell 4.14 million barrels last week. WTI gained 81 cents, or 0.9 percent, to $92.61 a barrel at 4:36 p.m. in electronic trading in New York. The price was $92.52 before the report’s 4:30 p.m. release.
Brent for February settlement slipped 36 cents, or 0.3 percent, to end the session at $106.39 a barrel on the London-based ICE Futures Europe exchange. Volume was 12 percent above the 100-day average. The European benchmark grade was at a premium of $13.80 to WTI, down from $14.95 yesterday.
Purchases excluding autos climbed 0.7 percent in December, the biggest gain since February, the government report showed.
For all of 2013, retail sales rose 4.2 percent from the prior year, following a 5.4 percent gain in 2012.
The Standard & Poor’s 500 Index climbed 1.1 percent following the biggest drop in two months. The Dow Jones Industrial Average gained 0.7 percent.
“Solid U.S. retail sales data helped turn the S&P 500 higher, a leading economic indicator that sometimes lifts oil prices along with it,” said Tim Evans, an energy analyst at Citi Futures in New York, in an e-mail.
The U.S. is the world’s biggest oil user, accounting for about a fifth of total consumption in 2012, according to BP Plc’s Statistical Review of World Energy.
“The economic picture is looking better, and the market is attempting to stabilize,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We are looking for another drawdown in crude inventories. The market has really corrected far enough and is due for a rebound.”
Crude stockpiles in the U.S. decreased 1.3 million barrels, or 0.4 percent, last week to 356.6 million, the Bloomberg survey showed. That would be the lowest level since September.
Stockpiles of gasoline advanced 2.5 million barrels to an 11-month high and distillate fuel, including diesel and heating oil, rose 1.25 million barrels to the most since September, according to the survey.
The Energy Information Administration, the Energy Department’s statistical arm, is scheduled to release its weekly petroleum report at 10:30 a.m. tomorrow in Washington.
Brent slid after Mohamed El Harari, a spokesman for Libya’s state-run National Oil Corp., said the demands of protesters who threatened to shut the Sharara oil field by tomorrow have been met. Output from the field reached 322,000 barrels today, he said in a telephone interview from Libyan capital of Tripoli.
Production from Sharara resumed on Jan. 4, ending a 90-day suspension, after protesters agreed to postpone their action for two weeks. The country, the holder of Africa’s largest oil reserves, pumped 210,000 barrels a day of oil in December, unchanged from the prior month and the lowest level since September 2011, according to data compiled by Bloomberg.
Implied volatility for at-the-money WTI options expiring in March was 19.5 percent, down 19.6 from yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 606,375 contracts at 4:36 p.m. It totaled 512,183 contracts yesterday, 2.4 percent lower than the three-month average. Open interest was 1.63 million contracts.