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Crude Oil Gains as Potential Stimulus Offsets U.S. Supply Growth

Nov. 14 (Bloomberg) -- Crude rose for the first time in three days on speculation that Japan may pursue more aggressive monetary easing, potentially adding to fuel demand.

Futures rose as much as 0.7 percent before paring gains, with the Standard & Poor’s GSCI Index of commodities advancing for the first time in three days. Japan’s Prime Minister Yoshihiko Noda said he is willing to dissolve parliament on Nov. 16, pushing the yen lower as investors speculated that the central bank would add stimulus to revive the economy. U.S. inventories probably climbed last week to the highest in more than three months, according to a Bloomberg survey before a government report tomorrow. U.S. equity futures rose.

“Crude oil prices are edging higher so far today, within their recent range, partly buoyed by some technical speculative buying as weakness creeps into the dollar,” Myrto Sokou, an analyst in London at Sucden Financial Ltd., said in a note.

Crude for December delivery climbed to a high of $86 a barrel and was at $85.52 a barrel, up 14 cents, in electronic trading on the New York Mercantile Exchange at 8:26 a.m. local time. The contract declined 19 cents to $85.38 yesterday, the lowest close since Nov. 8. Prices lost 13 percent this year.

Brent oil for December settlement, which expires tomorrow, was up 28 cents at $108.54 a barrel on the London-based ICE Futures Europe exchange. The more actively traded January contract gained 28 cents to $107.62. The European benchmark crude was at a premium of $23.06 to New York futures. The spread narrowed yesterday for the first time in three days to $22.88.

Price Outlook

Brent will trade in a range of $105 to $115 a barrel through the end of this year. Gordon Kwan, the head of regional energy research for Mirae Asset Securities Ltd. in Hong Kong, said in a report today.

The day’s upward price trend “looks like it’s stock-market related,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said by telephone “There’s a feeling creeping in that the worst is over for equities.”

The Organization of Petroleum Exporting Countries is unlikely to cut production when it meets in Vienna on Dec. 12, Secretary-General Abdalla El-Badri said in an interview in London yesterday. The 12-member group, which pumps about 40 percent of the world’s oil, has an output ceiling of 30 million barrels a day.

U.S. crude stockpiles probably increased 2.5 million barrels last week to the highest level since July 20, according to the median estimate of nine analysts surveyed by Bloomberg News before the Energy Department report. The country is the world’s largest oil consumer.

Gasoline Demand

Gasoline stockpiles fell 500,000 barrels, the survey showed. Distillate-fuel inventories, including heating oil and diesel, are expected to have declined 900,000 barrels.

The Energy Department in Washington is releasing supply data a day late because of the Veterans Day holiday on Nov. 12. The industry-funded American Petroleum Institute will publish its stockpile report today.

U.S. gasoline demand decreased 0.8 percent last week to the lowest level since March as Hurricane Sandy disrupted travel and supplies on the East Coast for a second week, according to MasterCard Inc.’s SpendingPulse report.

Drivers bought 8.39 million barrels a day of the motor fuel in the week ended Nov. 9, the second-biggest payments network company said yesterday in its SpendingPulse report

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