Dec. 28 (Bloomberg) -- Oil headed for the biggest weekly gain since September in New York as U.S. lawmakers scheduled talks aimed at averting automatic tax increases and spending cuts that threaten the economy of the world’s largest consumer.
West Texas Intermediate climbed as much as 0.7 percent, extending this week’s advance to 2.7 percent. Congressional leaders plan to meet with President Barack Obama today, seeking to resolve a budget impasse before at least $600 billion in fiscal measures take effect on Jan. 1. House Majority Leader Eric Cantor announced the chamber will meet Dec. 30 for its first Sunday session in more than two years. U.S. stockpiles shrank last week, an industry report showed yesterday.
“Prices could jump if U.S. politicians strike a deal on avoiding the fiscal cliff,” said Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark, who predicts Brent, the benchmark grade for half the world’s oil, will be little changed in the first quarter, averaging $112 a barrel. “If no deal is struck, prices are likely to trade sideways at current levels.”
WTI for February delivery climbed as much as 62 cents to $91.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.02 at 12:24 p.m. London time. The volume traded for all contracts was about 34 percent below the 100-day average. Futures are set for their first annual drop since 2008.
Brent for February settlement on the London-based ICE Futures Europe exchange increased as much as 58 cents, or 0.5 percent, to $111.38 a barrel. The volume was 50 percent less than the 100-day average. It was at a premium of $19.62 to WTI, down from $19.93 yesterday, the narrowest closing spread in almost 10 weeks.
Senate Majority Leader Harry Reid, House Speaker John Boehner, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell are scheduled to attend the meeting with Obama in Washington today, said White House spokeswoman Amy Brundage. Cantor announced plans on Twitter for the Dec. 30 House session, without saying what action the chamber may take.
A failure to reach an agreement on the budget plan might push the U.S. into a recession in the first half of 2013, according to the nonpartisan Congressional Budget Office.
WTI has declined 7.9 percent this year as the U.S. shale boom deepened the glut at Cushing, Oklahoma, America’s biggest storage hub. That’s left it at an average $17.47 a barrel below Brent this year, compared with a premium of about 95 cents in the 10 years through 2010. Brent has risen 3.7 percent in 2012.
U.S. crude inventories fell 1.17 million barrels to 370.5 million last week, the lowest in nine weeks, the industry-funded American Petroleum Institute said yesterday. An Energy Department report today may show a drop of 1.75 million, according to the median estimate of 10 analysts surveyed by Bloomberg News. Supplies at Cushing, the delivery point for WTI contracts, climbed 2.23 million barrels to a record 49.2 million, the API data showed.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Crude may rise next week as stronger economic growth boosts demand, according to a separate Bloomberg survey. Nine of 18 analysts and traders, or 50 percent, forecast crude will advance through Jan. 4. Eight respondents, or 44 percent, predicted a decrease. Last week, 39 percent projected a gain.
Applications for U.S. unemployment-insurance payments fell by 12,000 to 350,000 in the week ended Dec. 22, bringing the average over the past month to the lowest in more than four years, Labor Department data showed yesterday. Purchases of new houses rose 4.4 percent to the highest level since April 2010, according to the Commerce Department.