Nov. 9 (Bloomberg) -- Oil climbed as better-than-forecast consumer-sentiment data tempered concern political wrangling in the U.S. will slow the economy of the world’s biggest crude- consuming country.
Futures rebounded after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment for November increased to 84.9 from 82.6 the prior month. A reading of 82.9 was projected in a Bloomberg survey. Prices dropped earlier on concern U.S. lawmakers will be unable to compromise and avoid automatic spending cuts and tax increases at the start of 2013.
“The consumer sentiment numbers were expected to improve but not be that good,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The market turned around with the release of the numbers. Prior to their release, we were heading to new lows.”
Crude oil for December delivery rose 43 cents, or 0.5 percent, to $85.52 a barrel at 11:11 a.m. on the New York Mercantile Exchange. The contract traded between $84.13 and $85.64 a barrel today. Prices are down 13 percent this year.
Brent oil for December settlement increased 47 cents, or 0.4 percent, to $107.72 a barrel on the London-based ICE Futures Europe Exchange.
The Michigan consumer sentiment index averaged 64.2 during the last recession and 89 in the five years leading up to the 18-month economic slump that began in December 2007.
The U.S. economy will contract if Congress fails to act and allows more than $600 billion of tax increases and spending cuts to take effect next year, Fitch Ratings said. A report from the Congressional Budget Office published late yesterday reiterated that failing to avoid the fiscal cliff would lead to a recession in the first half of 2013.
“The continuation of political gridlock in Washington could lead us over a fiscal cliff and into recession,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The likeliest outcome is a stopgap measure. They will then kick a final resolution down the road, which got us into this mess in the first place.”
The Organization of Petroleum Exporting Countries cut forecasts for demand for its crude next year and said that it decreased production last month. The 12-member group will need to provide an average of 29.7 million barrels a day in 2013, 1.25 million less than it’s currently pumping, and 100,000 a day less than it forecast a month ago, the Vienna-based group said in a report today.
Supply from OPEC dropped by 0.2 percent to 30.95 million a day in October, the lowest level since December, because of declines in Nigeria, Iran and Saudi Arabia, the report showed.
Rationing of gasoline came to New York City and Long Island today, following New Jersey, which imposed restrictions in 12 counties on Nov. 2. Supplies in the region were disrupted by Hurricane Sandy, which made landfall in New Jersey 11 days ago.
Gasoline for December delivery rose 4.6 cents, or 1.8 percent, to $2.6533 a gallon in New York.