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Oil Trades Near Four-Month High on Demand, Euro-Area Confidence

Jan. 8 (Bloomberg) -- Oil rose, trading near the highest level in almost four months in New York on estimates that U.S. refiners boosted crude use and amid signs of an economic recovery in Europe.

West Texas Intermediate futures advanced as much as 0.7 percent, the third consecutive daily increase. Refineries probably raised their average run rate last week by 0.2 percentage points to 90.6 percent, according to a Bloomberg survey ahead of an Energy Department report tomorrow. Economic confidence in the euro area increased more than economists forecast in December, data from the European Commission in Brussels showed today.

“Oil has a moderate up-side bias due to improving market sentiment and a slow tightening of the supply-demand balance,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, who predicts Brent will rise to $118 a barrel this quarter. “But tightening doesn’t mean the market is tight, just that the oversupply is shrinking.”

Crude for February delivery advanced to as much as $93.80, its strongest since Jan. 2, and was up 40 cents at $93.59 a barrel in electronic trading on the New York Mercantile Exchange at 1:04 p.m. London time. The contract increased 10 cents to $93.19 yesterday, the highest settlement since Sept. 18.

Brent for February settlement added 78 cents to $112.18 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $18.66 to WTI. The difference shrank to $18.21 yesterday, the narrowest closing level since Sept. 24.

Refinery Maintenance

An index of executive and consumer sentiment in the euro region rose to 87 from 85.7 in November, the European Commission in Brussels said. Economists had forecast an increase to 86.3, according to the median of 24 estimates in a Bloomberg survey.

Gasoline futures rose yesterday as some U.S. refineries cut production of fuels during maintenance. Gasoline for February delivery increased 0.5 percent to $2.7774 a gallon on the Nymex.

Motiva Enterprises LLC shut a 325,000 barrel-a-day crude unit at its Port Arthur, Texas, refinery. BP Plc began work on the fluid catalytic cracker at its 266,000 barrel-a-day Carson plant in California.

U.S. gasoline inventories probably gained by 2.6 million barrels last week, according to the median of six analyst estimates in the Bloomberg survey before tomorrow’s Energy Department report. Distillate supplies, a category that includes heating oil and diesel, probably increased by 1.65 million barrels, the survey shows.

Stockpiles Rise

Crude stockpiles probably rebounded 1.4 million barrels after tumbling 11.1 million barrels in the week ended Dec. 28. Supplies have decreased during December and risen in January for the past six years because of inventory shifts for tax and accounting purposes. Companies in U.S. Gulf Coast states minimize supplies at the end of the year to reduce local taxes.

The American Petroleum Institute will release separate inventory data today. 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.

The premium of Brent oil to WTI has narrowed this week as Enterprise Products Partners LP and Enbridge Inc. prepare to resume service on the 500-mile (805-kilometer) Seaway link at full rates after more than doubling the line’s capacity to 400,000 barrels a day from 150,000.

Seaway Pipeline

Higher capacity on Seaway, which runs from Cushing, Oklahoma, to Freeport, Texas, may reduce a glut in the U.S. Midwest and shrink imports to the Gulf Coast, home to about half of the country’s refining facilities. Supplies at Cushing, the delivery point for WTI and the nation’s biggest storage hub, rose to a record 49.75 million barrels on Dec. 28, Energy Department data show.

WTI slid 7.1 percent last year as a shale boom deepened the glut and left the U.S. benchmark crude at an average $17.47 a barrel below Brent, compared with a premium of about 95 cents in the 10 years through 2010. Brent, the marker grade for more than half the world’s oil, rose 3.5 percent in 2012.

China’s exports probably gained 5 percent year-on-year in December, up from 2.9 percent in November, according to a Bloomberg News survey before data from the Customs General Administration in Beijing. Imports rose 3 percent after being unchanged the prior month, the survey shows.

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