By Grant Smith and Ann Koh Dec. 30 (Bloomberg) -- Crude oil rose for a sixth day in London on forecasts that U.S. stockpiles are shrinking, while unrest in Iran sows concerns of a supply disruption. U.S. crude inventories probably fell by 1.85 million barrels last week, according to a Bloomberg News analyst survey before an Energy Department report due today at 10:30 a.m. in Washington. Iran, holder of the world’s second-largest oil reserves, detained about 1,000 people after the biggest anti- government demonstrations in six months. “Stocks are showing the market is getting towards a more balanced situation, though it will take time,” said Alexandra Kogelnig, a consultant at JBC Energy GmbH in Vienna. “Tensions in Iran are always a factor even if there is nothing immediately happening; if something major happens it will affect exports.” Brent crude for February settlement advanced as much as 56 cents, or 0.7 percent, to $78.20 a barrel on London’s ICE Futures Europe exchange. It traded for $78.02 at 10:35 a.m. local time. Brent has gained 71 percent this year, its biggest annual increase since 1999. Iran yesterday accused Western countries of inciting clashes on Dec. 27 between opposition supporters and security forces in the capital Tehran and other cities, which killed at least eight people, according to state media reports. On the New York Mercantile Exchange, oil for February traded up 6 cents at $78.93 a barrel in electronic trading as of 10:36 a.m. London time. Yesterday’s $78.87 closing price was the highest settlement since Nov. 18. Futures are set for a 77 percent gain this year, and have tripled in the past decade. Sideways Movement “After strong gains over the past year, there’s a propensity to lock in profits and reposition for 2010,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “You’re going to see sideways movement.” A stronger dollar is limiting oil’s gains by reducing the appeal of commodities as an investment. The dollar may rise against the euro before a report that economists expect will show U.S. manufacturing has grown for a fifth month. The dollar traded for $1.4355 against the euro at 10:38 a.m. London time. A “major Arctic wave” heading for the U.S. will probably prompt millions of households to use more heating fuel this winter, according to State College, Pennsylvania-based AccuWeather.com. Oil Inventories Drop U.S. crude inventories probably declined to about 325.7 million barrels last week from 327.5 million the prior week, according to the Bloomberg survey of 14 analysts before the Energy Department’s report. Gasoline supplies probably climbed by 1 million barrels, compared with a 2.23 million-barrel drop in distillates, a category that includes heating oil and diesel. The American Petroleum Institute said yesterday that crude inventories rose by 1.73 million barrels last week to 330.5 million. Refinery utilization rates fell to 78.2 percent in the week ended Dec. 25 from 78.4 percent a week earlier, according to the industry-funded API. “The demand outlook is the very big swing variable in the oil market at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank, in a Bloomberg Television interview. “If you couple that with the fact that you have a large supply overhang, it’s difficult to see the oil price moving higher in a trend sense.” To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net.

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