Oil rose for the first time in three days on signs that the economic recovery is gathering strength and reining in excess fuel inventories. Futures gained after data showed Japan’s economy grew more than initially estimated in the third quarter. A U.S. government report yesterday showed crude stockpiles held by the world’s biggest oil consumer declined almost three times more than forecast. The Organization of Petroleum Exporting Countries will meet to review production quotas at the end of the week. “The market is anticipating improving fundamentals in 2011,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna. “But crude inventory levels remain rather high, above the upper end of the last five years. So in the short-term, risk appetite has to intensify for a rise to $100.” Crude for January delivery rose as much as $1.14, or 1.3 percent, to $89.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $88.61 at 10:56 a.m. London time. Brent crude for January settlement rose as much as 87 cents, or 1 percent, to $91.64 a barrel on the London-based ICE Futures Europe exchange. U.S. crude inventories fell 3.82 million barrels last week to 355.9 million, the Energy Department said. Supplies were forecast to decrease 1.4 million, according to the median estimate of 16 analysts surveyed by Bloomberg News. ‘Bit of Impetus’ “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.” The Standard & Poor’s 500 Index rose to a two-year high in New York yesterday following President Barack Obama’s extension of Bush-era tax cuts earlier this week. Japan’s gross domestic product grew at an annualized 4.5 percent rate in the three months ended Sept. 30, faster than the 3.9 percent reported last month, the Cabinet Office said today in Tokyo. Yesterday, New York oil futures 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.” Oil in New York may halt its advance past a 26-month peak above $90 a barrel because of resistance on technical charts indicated by Bollinger Bands, according to Cameron Hanover Inc. Crude climbed to $90.76 a barrel on Dec. 7, the highest intraday price since October 2008. Investors may start selling contracts when prices advance to around $90.55, said Peter Beutel, president of the energy adviser in New Canaan, Connecticut. That’s the higher of two Bollinger Bands. OPEC Quota OPEC, which pumps about 40 percent of the world’s crude, 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 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. To contact the reporters on this story: 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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