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Oil Rises First Time in Four Days on Inventories, U.S. Budget

Nov. 29 (Bloomberg) -- Oil rose for the first time in four days in New York after U.S. stockpiles declined unexpectedly and political leaders in the world’s biggest crude consumer expressed optimism about agreeing on a federal budget.

Futures advanced as much as 1.8 percent after sliding 0.8 percent yesterday to a two-week low. Republican House Speaker John Boehner believes talks on tax increases and spending cuts known collectively as the fiscal cliff can “avert this crisis sooner rather than later,” he told reporters. President Barack Obama said he hopes to reach a deal before Christmas. U.S. crude supplies slid 347,000 barrels last week, an Energy Department report showed. They were forecast to climb 350,000 barrels, according to a Bloomberg News survey of analysts.

“The oil market is still reasonably tight,” said Tobias Merath, head of commodity research at Credit Suisse AG in Zurich, who predicts crude will rise about $5 a barrel in the next three months. “There could be a year-end rally for crude as global supply growth seems to be peaking, and economic growth has surprised a bit to the upside.”

West Texas Intermediate crude for January delivery climbed as much as $1.54 to $88.03 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.81 at 1:28 p.m. London time. The contract pared a $1.82 decline yesterday to close down 69 cents at $86.49, the lowest since Nov. 15. Prices have fallen 11 percent this year.

Brent for January settlement rose $1.16 to $110.67 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.93 to West Texas Intermediate futures, compared with $23.02 yesterday.

Fuel Supplies

More than $600 billion in automatic tax increases and spending cuts will kick in next year if an agreement on the U.S. budget isn’t reached. Obama, a Democrat, said at the White House that more Republicans are agreeing on a “balanced approach” to cut the deficit.

“The fiscal cliff is a very significant thing for world economies and therefore oil demand,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “The consensus view is that a reasonable compromise will be reached.”

U.S. gasoline supplies gained 3.87 million barrels last week, the Energy Department figures showed. They were forecast to rise 900,000 barrels, according to the median estimate of 11 analysts in the survey. Distillate inventories, a category that includes heating oil and diesel, fell 800,000 barrels, compared with a projected increase of 500,000 in the survey.

OPEC Satisfied

Most ministers and officials in the Organization of Petroleum Exporting Countries who have commented publicly say the oil market is balanced, signaling little desire to alter output targets when they meet next month in Vienna.

The market is adequately supplied, Angola’s national representative to OPEC, Luis Neves, said in an interview in Cape Town on Nov. 27. Ecuador doesn’t see any need to change current production levels at the Vienna meeting, Non-Renewable Natural Resources Minister Wilson Pastor told reporters yesterday in Quito, the Ecuadoran capital.

Japan’s crude imports from Iran fell 48 percent in October from September to 469,024 kiloliters, or about 95,000 barrels a day, according to data today from the Ministry of Finance. That’s the second-lowest level since the U.S. exempted the Asian nation from sanctions targeting the Middle Eastern country’s nuclear program. Imports declined 63 percent from a year earlier.

U.S. and European Union officials say Iran’s nuclear development is aimed at producing atomic weapons, while the government in Tehran says the project is for civilian purposes. U.S. Secretary of State Hillary Clinton granted Japan a waiver in March that allows the country to import Iranian crude in return for having “significantly reduced” its intake. The exemption was renewed for six months on Sept. 14.

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