Oil rose for a second day in New York on signs that Chinese demand will withstand measures to slow the economy and that U.S. consumption is recovering. Futures narrowed their weekly decline after China said November crude imports surged and the International Energy Agency raised its 2011 oil demand forecast for a third month. A U.S. government report yesterday showed jobless claims dropped more than forecast. China’s central bank said it will raise the amount the nation’s lenders must hold as reserves from Dec. 20. “Current prices have a lot to do with strong demand out of China as well as cold weather in the U.S. and Europe,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “However, both inventories and OPEC spare capacity are still high, so I expect prices to retrace below $88, maybe even to $86.30.” The January contract gained as much as 61 cents to $88.98 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.85 at 10:38 a.m. London time. Brent crude for January settlement rose as much as 57 cents, or 0.6 percent, to $91.56 a barrel on the ICE Futures Europe exchange in London. Crude trimmed its gains after China’s central bank said it will raise the amount the nation’s lenders must hold as reserves by 50 basis points. China imported 20.9 million metric tons last month, or about 5.1 million barrels a day, compared with October’s 16.4 million, according to preliminary data today from the General Administration of Customs in Beijing. Oil in New York rose to $90.76 a barrel on Dec. 7, the highest level since October 2008. Futures, down 0.4 percent this week, have gained 12 percent this year. Refilling Tanks Refiners in China, the world’s second-biggest crude user, have increased fuel production to meet a shortfall in diesel supplies. Diesel stockpiles shrank for seven straight months through October and are now at about 6.2 million compared with 11.5 million in February, according to Xinhua News Agency data. “It looks like refiners are starting to refill the storage tanks after stock levels have come down,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The market is cautious today with the Chinese inflation numbers still due and OPEC still to meet.” The International Energy Agency raised its 2011 global crude oil demand forecast for a third month, citing consumption gains in North America and China. Crude use worldwide will average 88.8 million barrels a day next year, about 260,000 barrels more than its previous forecast, the Paris-based adviser said today in its monthly Oil Market Report. Increasing demand could put pressure on OPEC to boost supply early next year, the IEA said. OPEC Action Prices climbing to $100 may indicate “something wrong with fundamentals” in the market and prompt the Organization of Petroleum Exporting Countries to take action, said Abdalla El- Badri, the group’s secretary-general. Crude prices are at “suitable levels,” OPEC’s El-Badri said yesterday in Quito, Ecuador, where the organization will meet Dec. 11 to review its output. Demand is growing fast in China and India and moderately in members of the Organization for Economic Cooperation and Development, he said. Oil may decline next week amid speculation that China will raise interest rates, a Bloomberg survey showed. Eighteen of 39 analysts, or 46 percent, forecast crude will fall through Dec. 17. Last week, analysts were split over the market’s direction. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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