Oil traded near its highest in 26 months ahead of a report forecast to show that U.S. crude stockpiles declined for the first time in three weeks. Inventories dropped 1.5 million barrels, or 0.4 percent, in the seven days ended Dec. 3 from 359.7 million a week earlier, according to a Bloomberg survey before an Energy Department report tomorrow. Oil’s 14-day relative strength index, a measure of how fast prices have risen or dropped in that period, was at 65.85, a level that suggests prices may have gained too quickly. “The expectations are that we’ll see some inventory drawdowns tomorrow,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “A weaker dollar is helping support crude, though macro sentiment is mixed. The market is overbought, and any escalation in concern about risk could trigger profit-taking.” Crude for January delivery was at $89.43 a barrel, up 5 cents, in electronic trading on the New York Mercantile Exchange at 9:02 a.m. London time. Yesterday, prices rose to $89.38, the highest settlement since Oct. 7, 2008. Brent crude for January settlement was at $91.40 a barrel, down 5 cents, on the London- based ICE Futures Europe exchange. Futures in New York recouped some of an earlier 0.7 percent decline today as the Dollar Index, a measure of the currency against six major peers, slipped 0.2 percent. Oil climbed yesterday amid speculation that the U.S. may extend economic stimulus measures and on forecasts of cold weather for the U.S. and Europe. Futures have gained 13 percent this year. Chart Resistance Oil failed to breach long-term chart resistance at $89.84 a barrel, the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July of that year. The Fibonacci sequence of numbers was identified by Italian mathematician Leonardo Fibonacci in the 13th century and is used to predict points where prices may rise or fall. “Oil is taking a breather, given that we’re at pretty high levels after putting on about 6 percent last week,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “It could be a bit of profit-taking.” The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. Gasoline supplies are expected to have risen 875,000 barrels, or 0.4 percent, from 210.2 million, Bloomberg’s survey showed. It would be the third weekly gain, the longest sequence of increases since August. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably decreased 550,000 barrels, or 0.3 percent, from 158.1 million. The industry-funded American Petroleum Institute will release weekly supply and demand data later today. MasterCard Inc. will also publish its weekly SpendingPulse report with data on U.S. gasoline demand. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global oil supplies, will meet to review its production quota on Dec. 11 in Quito, Ecuador. The organization hasn’t changed its output target since 2008. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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