Crude rose in New York as China held off raising interest rates, boosting speculation that oil demand will continue to grow in the world’s largest energy user. China refrained from increasing borrowing costs after a report on Dec. 11 that inflation in the country climbed 5.1 percent, easing concern the economy may slow and limit fuel usage. The International Energy Agency on Dec. 10 raised its demand outlook for 2011 on increases in North America and Asia. The Organization of Petroleum Exporting Countries maintained production quotes at a Dec. 11 in Quito. “China’s delaying of an interest rate increase has added to the other more positive fundamental factors,” said Yingxi Yu, a commodity analyst with Barclays Capital in Singapore. “We’re seeing draws in inventories and that’s a clear sign demand is outpacing supply.” The January contract rose as much as 67 cents, or 0.8 percent, to $88.46 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $88.43 at 3:35 p.m. Singapore time. It earlier dropped as much as 0.4 percent to $87.44 a barrel. The contract closed Dec. 10 at $87.79, the lowest in seven days, capping the first weekly decline in three. Prices also gained after China Mainland Marketing Research Co. said the nation’s refiners increased crude processing 10.3 percent to a record 36.65 million metric tons in November, or 8.96 million barrels a day. That exceeded the record of 8.76 million barrels a day in October. China Shipments China increased net imports of crude by 26 percent in November from a month earlier as refineries ramped up processing rates to ease a diesel shortage. Net purchases were 20.3 million metric tons, or 5 million barrels a day, the highest since September’s record 22.9 million tons, data from the Beijing- based General Administration of Customs showed. Oil inventories in the Organization of Economic Cooperation and Development in November dropped by 8.4 million barrels, the IEA said in its Oil Market Report, citing preliminary data. The Paris-based adviser raised its 2011 demand forecast by 260,000 barrels to an average of 88.8 million barrels a day, the third month it has increased its outlook. Brent crude oil for January settlement climbed as much as 91 cents, or 1 percent, to $91.39 a barrel. The contract on Dec. 10 fell 51 cents, or 0.6 percent, to end the session at $90.48 a barrel on the London-based ICE Futures Europe exchange. Long Positions Hedge-fund managers and other large speculators increased their net-long position in crude-oil futures and options in the week ended Dec. 7, according to Commodity Futures Trading Commission data. Managed-money bets that prices will rise outnumbered short positions by 206,807 futures, the Washington-based regulator said in its weekly Commitments of Traders report. Net long positions rose by 42,603 contracts, or 25.95 percent, from a week earlier. Producers and merchants increased so-called net-short positions by 13 percent in the week ended Dec. 7, according to the CFTC report. Sales increased for the first time in four weeks as producers secured profits near $90 a barrel, reversing a two-year contango and raising speculation that stockpiles will decline. OPEC maintained its output quotas, forecasting demand growth will slow as the global economy struggles to recover amid ample supplies. Oil supply and demand are “in balance,” and $70 to $80 is “a good price” for oil, Saudi Arabian Oil Minister Ali al- Naimi said at the group’s meeting in Quito, Ecuador, on Dec. 11. To contact the reporter on this story: 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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