Oil traded above $90 a barrel for a second day in New York on signs the U.S. recovery is gaining strength and absorbing surplus crude inventories. Futures advanced 1 percent yesterday after crude stockpiles fell more than analysts estimated, while reports showed U.S. service industries expanded and companies added workers in December. BlackRock Inc.’s Daniel Rice, who beat 99.9 percent of U.S. stock-fund managers over the past decade, said oil prices will probably top $100 this year. “Demand for oil is turning out to be more robust than originally anticipated,” said Christopher Bellew, a senior broker with Bache Commodities Ltd. in London. “The latest U.S. economic data came in better than expected. But there remains the risk that a short-term spike in prices will damage growth.” The February contract was at $90.28 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 10:03 a.m. London time. Futures earlier gained as much as 41 cents to $90.71. Yesterday, it rose 92 cents to $90.30. Prices are 8.6 percent higher than a year earlier. Brent crude oil for February settlement was at $95.34 a barrel, down 16 cents, on the London-based ICE Futures Europe exchange. The Institute for Supply Management’s non-factory index, which covers about 90 percent of the economy, rose to 57.1. A report yesterday from ADP Employer Services showed companies boosted payrolls in December by the most since records began in 2001. Employment jumped by 297,000, almost three times the 100,000 median estimate of economists surveyed. U.S. Stockpiles An Energy Department report yesterday showed crude inventories declined 4.16 million barrels to 335.3 million last week, falling more than double what analysts forecast in a Bloomberg News survey. “The market is still see-sawing,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “Overnight, the jobs data and service sector data was all very positive. If the dollar strengthens we could see some liquidation of positions.” U.S. stockpiles of crude have contracted 24.4 million barrels in five weeks. Stockpiles last week were forecast to decrease by 2 million barrels, according to the median of 17 analyst responses in a Bloomberg News survey. Refiners along the Gulf of Mexico Coast reduce stockpiles in December to lower year-end tax liabilities. Gasoline supplies climbed 3.29 million barrels to 218.1 million, the Energy Department said. They were forecast to gain 500,000 barrels, according to the survey. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 1.15 million barrels to 162.1 million. A 750,000-barrel increase was projected. U.S. Payrolls West Texas Intermediate oil, the grade deliverable against the New York futures, is trading at a discount of $5.04 a barrel to Brent. The difference was $5.20 yesterday, the most since May 14. The spread widened after the Energy Department said that supplies at Cushing, Oklahoma, the delivery point for the contract, rose 858,000 barrels to 37.5 million, the highest level since Aug. 6. An expanding global economy is likely to push oil prices above $100 this year, according to BlackRock’s Rice, whose fund returned 18 percent annually in the past 10 years. “I will be bullish on the stocks for part of the next surge, but I won’t be if oil gets to $120,” the manager of the $1.5 billion BlackRock Energy & Resources Fund said. Crude prices may rise following tomorrow’s report on U.S. non-farm payrolls, Purvin & Gertz’s Shum said. The country may have added 150,000 jobs in December, according to a Bloomberg News survey of economists, up from a gain of 39,000 in November. 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 on sev@bloomberg.net

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