Oil rose for the first time in three days after a U.S. government report showed crude stockpiles held by the world’s biggest consumer of the fuel declined almost three times more than forecast. Futures reversed yesterday’s 0.5 percent drop after the Energy Department said inventories fell 3.82 million barrels last week to 355.9 million. Supplies were forecast to decrease 1.4 million, according to the median estimate of 16 analysts surveyed by Bloomberg News. The Standard & Poor’s 500 Index rose to a two-year high in New York following President Barack Obama’s extension of Bush-era tax cuts earlier this week. “If you look at this crude number as part of a trend, you’re definitely starting to see a decline,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “It looks to be something more fundamental happening and might be providing a bit of impetus. In the short to medium term, the tax cuts are important for U.S. demand and consumption growth.” Crude for January delivery rose as much as 92 cents, or 1 percent, to $89.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $89.06 at 2:20 p.m. Singapore time. Yesterday, it lost 41 cents to $88.28. Prices, up 78 percent in 2009, have gained 12 percent this year. U.S. gasoline inventories added 3.81 million barrels to 214 million last week, the biggest percentage increase since November 2009. Stockpiles were forecast to decline 300,000 barrels, based on the Bloomberg survey. Distillate fuel supplies, including heating oil and diesel, climbed 2.15 million barrels to 160.2 million, ending a 10-week drawdown. Runs ‘Surge’ U.S. product inventories increased as refiners boosted processing by the most since October 2008. Capacity utilization rose 4.9 percentage points to 87.5 percent, the Energy Department report said. That’s the highest rate since the week ended Sept. 17. The data were “entirely driven by a surge in crude runs,” Michael Wittner, New York-based head of oil market research at Societe Generale SA, said in a report yesterday. “Refiners processed much more crude week-on-week, which drove an unexpected crude draw. Product supply rose significantly.” Fuel demand in terms of products supplied by refiners jumped 8.3 percent last week to 20 million barrels a day, according to the Energy Department. That’s the biggest gain since the week to May 7, 2004, and the highest total since May this year. OPEC Quotas The Organization of Petroleum Exporting Countries will keep production targets unchanged as oil rises toward $100 a barrel, according to Shokri Ghanem, chairman of Libya’s National Oil Corp. The 12-member group pumps about 40 percent of the world’s crude. OPEC will probably agree on a quota extension and focus on discussing output compliance when it meets Dec. 11 in Quito, Ecuador, Ghanem said yesterday at Amsterdam’s Schiphol airport. Oil will climb to $100 “pretty soon” and once that happens, group members may alter their production strategy, he said. Prices “are not reacting to supply and demand,” Qatar’s Energy Minister Abdullah bin Hamad al-Attiyah said in an interview in Cancun, Mexico. Oil inventories are at record levels and the economic recovery in Europe and the U.S. has been choppy, he said. Brent crude for January settlement rose as much as 75 cents, or 0.8 percent, to $91.52 a barrel on the London-based ICE Futures Europe exchange. Yesterday, the contract decreased 62 cents, or 0.7 percent, to end the session at $90.77. http://www.bloomberg.com/news/2010-12-08/oil-rises-first-time-in-three-days-as-crude-supply-drop-exceeds-forecasts.html To contact the reporters on this story: Ben Sharples in Canberra at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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