Nov. 21 (Bloomberg) -- Oil advanced for the third time in four days on declining U.S. inventories and rising economic optimism. The gains eased after Israel and Hamas agreed to a cease-fire, reducing concern that supplies would be disrupted.
Prices increased as much as 1.3 percent as stockpiles of crude, gasoline and distillates declined and the Bloomberg monthly expectations gauge rose to 4 from minus 7. Oil pared gains after Secretary of State Hillary Clinton and Egyptian Foreign Minister Mohamed Amr said in Cairo that the accord is scheduled to take effect at 9 p.m. local time.
“Every time you hear something about a peace agreement, the market will fall,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The oil market is very sensitive to the Middle East.”
Crude oil for January delivery gained 34 cents, or 0.4 percent, to $87.09 a barrel at 1:09 p.m. on the New York Mercantile Exchange. The price reached $87.89 in earlier trading.
Brent for January settlement advanced 51 cents, or 0.5 percent, to $110.34 a barrel on the ICE Futures Europe exchange in London.
The share of households in the Bloomberg survey projecting the economy will get better rose to 37 percent in November, the highest since March 2002. Jobless claims fell last week, while the index of leading economic indicators advanced in October, other reports showed.
Oil supplies fell 1.47 million barrels to 374.5 million in the week ended Nov. 16, the Energy Department reported. Stockpiles were forecast to gain 1 million barrels, according to the median of 11 analyst estimates in a Bloomberg survey.
Gasoline inventories fell 1.55 million barrels to 200.4 million. Distillate supplies, which include heating oil and diesel, dropped 2.68 million to 112.8 million, the lowest level in more than four years.
Israel’s government has agreed to give the Egypt-negotiated agreement a chance, Prime Minister Benjamin Netanyahu’s office said in a text message. Clinton said that she welcomed the accord and expressed hopes it will “move us closer to a comprehensive peace.”
The agreement aims to halt airstrikes that have left more than 150 people dead in Gaza, and rocket attacks that have killed five Israelis, according to officials.
Oil gained earlier after a bus explosion in Tel Aviv left 21 people hospitalized.
The conflict has threatened further instability in the Middle East and North Africa, regions accounting for more than 35 percent of global crude production, according to BP Plc’s Statistical Review of World Energy.
“Geopolitical headlines are definitely the market movers here,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.