Oil was little changed near $88 a barrel in New York on speculation the U.S. economic recovery will strengthen next year and boost fuel demand. Crude pared earlier gains as the dollar rose against the euro, damping the investment appeal of commodities. Prices last week climbed 0.3 percent as an index of U.S. leading economic indicators increased by the most in eight months and data showed business confidence in Germany, Europe’s largest economy, climbed to a record in December. “Most people are quite positive on next year’s view and are willing to take risks,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “On Friday, the market was quite positive, as were most of the commodities, even though the dollar was quite strong.” Crude for January delivery was at $88.06 a barrel in electronic trading on the New York Mercantile Exchange, up 4 cents, at 1:23 p.m. Singapore time. The more actively traded February contract declined 5 cents to $88.55. Prices earlier pared gains of as much as 48 cents, or 0.6 percent, as the dollar increased on speculation North Korea will retaliate to artillery drills by its neighbor. The U.S. currency climbed as much as 0.5 percent to $1.3125 per euro, from $1.3188 on Dec. 17 in New York. Economic Rebound Oil, which rallied 78 percent in 2009, is up 11 percent this year on speculation the global economic recovery will boost consumption. The index of U.S. leading economic indicators, the New York-based Conference Board’s gauge of the outlook for the next three to six months, advanced 1.1 percent to the highest since March. The reading matched the median forecast of economists surveyed by Bloomberg News. The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, rose to 109.9 from 109.3 in November, the highest since records for a reunified Germany began in 1991. Economists predicted a drop to 109, the median of 36 forecasts in a Bloomberg News poll. Fuel demand in the U.S., the world’s biggest oil user, jumped 6.5 percent in November from a year earlier, the industry-funded American Petroleum Institute said in its monthly report Dec. 17. U.S. crude stockpiles fell 9.85 million barrels in the week ended Dec. 10 to 346 million, according to the Department of Energy. That’s the biggest drop since May 2008. “Consumer demand becomes increasingly hard to measure through the holiday season and end-of-year tax considerations create noise in the DOE inventory reports,” Stephen Schork, president of consultants The Schork Group Inc. in Villanova, Pennsylvania, said in a report. “We expect low volume and high volatility due to the holidays.” Brent crude for February settlement was at $91.65 a barrel, down 2 cents, on the London-based ICE Futures Europe exchange. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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