Brent Crude Rises, Paring Biggest Weekly Decline Since December

Brent crude advanced, paring a second weekly decline, after German business confidence rose more than economists forecast to a 10-month high.

Futures gained as much as 1.1 percent in London as the Munich-based Ifo institute’s business climate index climbed for a fourth month, adding to signs that Europe’s largest economy is gathering strength. West Texas Intermediate may fall next week as slowing demand boosts inventories, according to Bloomberg News survey.

“We are seeing the market correct after the sharp drop yesterday,” Thina Saltvedt, an analyst at Nordea Bank AG, said by phone today from Oslo. “There have been some better macro-indicators from the U.S. and the euro zone too.”

Brent for April settlement gained as much as $1.26 to $114.79 a barrel on the London-based ICE Futures Europe exchange and was at $114.40 as of 1:22 p.m London time. Prices are headed for a 2.8 percent decline this week after slipping 1 percent last week. The volume was 14 percent lower than the 100-day average.

WTI for April delivery rose as much as 64 cents to $93.48 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell to $92.84 yesterday, the lowest settlement since Dec. 31. The volume of all futures traded was 5 percent above the 100-day average. The European benchmark grade was at a premium of $21.28 to WTI after expanding to $23.18 on Feb. 8, the widest since Nov. 26.

Italy Vote

Ifo’s business climate index, based on a survey of 7,000 executives, climbed to 107.4 from 104.3 in January. Economists predicted an increase to 104.9, according to the median of 38 forecasts in a Bloomberg News survey.

Investors are awaiting the results of Italy’s general elections on Feb. 24 and Feb. 25, according to Saltvedt. Caretaker Prime Minister Mario Monti has pushed for cuts to reduce national debt of $2.6 trillion.

“The risk is that Italy will end up with a party that could increase the risk of a new economic downturn,” she said. “Investors will typically pull out of this market when uncertainty and risk version is increasing which in turn may lead to a drop in oil prices.”

WTI may fall next week as inventories rise, according to the Bloomberg survey. Twenty of 30 analysts and traders, or 67 percent, forecast crude will drop through March 1. Five respondents, or 17 percent, predicted a gain. Five said there would be little change. Last week, 48 percent of those surveyed projected a decrease.

Rising Inventories

U.S. crude stockpiles increased a fifth week, the longest stretch of gains since May, the Department of Energy said yesterday.

Inventories rose to 376.4 million barrels, the highest since July, according to the Energy Department. Supplies at Cushing, Oklahoma, the delivery point for WTI, were up 417,000 barrels to 50.7 million.

Futures in New York may decline after breaching support at the 50-day moving average, according to a technical analysis by Bill Baruch, a senior market strategist at in Chicago. The April contract may move toward the 200-day moving average around $92.22 a barrel, he said. It settled yesterday below the 50-day mean for the first time since Dec. 18.

The Organization of Petroleum Exporting Countries will increase shipments into next month as refiners in the U.S. and Europe prepare to start operating after seasonal maintenance, tanker tracker Oil Movements said yesterday.

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