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Oil Fluctuates on U.S. Inventory Increase, China Economy Boost

Dec. 5 (Bloomberg) -- Oil in New York was little changed on speculation that U.S. fuel inventories may rise and as China signaled it’s ready to boost stimulus if economic growth falters in the world’s second-biggest crude-consuming nation.

West Texas Intermediate futures were stable after advancing as much as 0.6 percent. A U.S. government report today may show product stockpiles rose last week. China will keep macroeconomic policies stable, making adjustments as needed to deal with difficulties, the Communist Party’s Politburo said in its first assessment under General Secretary Xi Jinping.

“The quote from Jinping overnight that policies in 2013 will be directed toward growth helped lift the sentiment in oil markets,” Ole Hansen, senior manager of trading advisory at Saxo Bank A/S in Copenhagen, said by phone.

Crude for January delivery rose as much as 55 cents to $89.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.57 at 1:09 p.m. London time. The contract dropped 59 cents yesterday to $88.50, the lowest close since Nov. 29. Prices are down 10 percent this year, set for the first annual decline in four years.

Brent for January settlement on the London-based ICE Futures Europe exchange rose 36 cents, or 0.3 percent, to $110.20 a barrel. The European benchmark crude was at a $21.51 premium to WTI. The spread shrank for a fourth day yesterday to $21.34, the narrowest since Nov. 2.

Gasoline Inventories

Gasoline inventories increased 5.71 million barrels last week, the most in a year, the industry-funded American Petroleum Institute said yesterday. The Energy Department may report a gain of 1.55 million, according to the median estimate of 12 analysts surveyed by Bloomberg News before an Energy Department report today.

Distillate inventories, a category that includes heating oil and diesel, gained 1.08 million barrels in the API data compared with a projected increase of 850,000 in the government report.

U.S. crude stockpiles probably fell 500,000 barrels in the week ended Nov. 30, the survey showed. Supplies dropped 2.22 million barrels, the API said.

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 in Washington for its weekly survey.

China will expand domestic demand, promote urbanization, strengthen real-estate controls and support small business, Xinhua News said yesterday, citing a statement issued after the meeting of Communist Party leaders headed by Xi, who will probably succeed Hu Jintao as president in March. The government will make an effort to keep investment growth steady, the official news agency said.

Fiscal Cliff

Oil’s rise in New York may stall along the upper Bollinger Band on the daily chart, around $89.53 a barrel today, according to data compiled by Bloomberg. Futures halted advances the past two days to settle below this indicator. Sell orders tend to be clustered near chart-resistance levels.

Crude fell yesterday after President Barack Obama said in a Bloomberg Television interview that a Republican offer to avert more than $600 billion in automatic tax increases and spending cuts known as the fiscal cliff doesn’t go far enough.

“The fiscal cliff is something that will potentially make a significant difference to U.S. economic growth and therefore to oil demand,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

The U.S. accounted for 21 percent of the world’s oil consumption and China 11 percent last year, according to BP Plc’s Statistical Review of World Energy.

The Organization of Petroleum Exporting Countries will probably keep its output quota unchanged for a second successive meeting next week as members judge prices high enough to cover their spending needs, according to a separate Bloomberg survey. All 18 analysts in the poll conducted from Nov. 29 through yesterday said there will be no change to the limit of 30 million barrels a day agreed a year ago. The 12-member group is scheduled to gather Dec. 12 in Vienna.

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