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Crude Futures Advance as IEA Boosts Demand Forecast, OPEC Meets

Dec. 12 (Bloomberg) -- Brent crude rose to a four-day high after the International Energy Agency increased its oil demand forecast for 2013 and as OPEC ministers met in Vienna to discuss the group’s production limits.

Futures climbed as much as 0.7 percent in London, a third straight advance. Global oil consumption will expand to 90.5 million barrels a day next year, more than previously forecast amid signs of a rebound in Chinese demand, the IEA said in a report today. There is consensus among OPEC members to keep output limits unchanged, Ecuador’s Minister of Non-Renewable Natural Resources Wilson Pastor told reporters at the group’s headquarters in Vienna today, before closed-door talks began.

“Some economic data has improved,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by phone. “I expect the OPEC meeting will result in them trying to bring production closer in line with the ceiling.”

Brent for January settlement added as much as 73 cents to $108.74 a barrel on the London-based ICE Futures Europe exchange, the highest since Dec. 6. Futures were at $108.64 as of 11:18 a.m. local time.

West Texas Intermediate for January delivery was at $86.20 a barrel, up 41 cents, in electronic trading on the New York Mercantile Exchange. Brent was at a premium of $22.38 to WTI.

Oil in New York has technical support along an upward- sloping trend line on the daily chart, around $85.73 a barrel today, according to data compiled by Bloomberg. A sustained drop below this line, which connects the intraday lows of June and November, will signal a so-called downside breakout, when losses tend to accelerate.

Rising Consumption

Global consumption in the final three months of 2012 will average 90.5 million barrels a day, about 435,000 barrels, or 0.5 percent, more than previously forecast, the Paris-based IEA said in a monthly report today.

“Markets have grown somewhat more optimistic about the Chinese economy as confidence indicators recently turned expansionary after a long period in the doldrums,” the IEA said.

Ministers from the Organization of Petroleum Exporting Countries are meeting in Vienna for the second time this year. The group last changed production limits a year ago, when the ceiling was raised to 30 million barrels a day.

While OPEC’s own forecasts show that it’s pumping more than consumers need, Saudi Arabia, Iraq, Iran, the United Arab Emirates, Angola, Ecuador and Libya have indicated that supply and demand are roughly in balance. The group, which provides about 40 percent of the world’s crude, will probably maintain its output quota, according to a Bloomberg survey of 18 analysts published last week.

Falling Output

Total production from all 12 OPEC nations slid to an 11- month low of 30.78 million barrels a day last month, according to a monthly report from the group yesterday that cited secondary sources for its data. That’s still above the official cap and about 1.03 million barrels a day more than the projected average demand for OPEC crude next year, the report said.

“I don’t expect any formal changes,” Torbjoern Kjus, a senior oil analyst at DNB ASA in Oslo, said by phone today. “The Saudis will do as they always do and cut production further going into next year to protect prices at $90 to $110” for Brent.

An Energy Department report today may show crude supplies shrank by 2.5 million barrels, according to a Bloomberg News survey. Crude inventories grew by 4.27 million barrels last week, the most since August, data from the American Petroleum Institute showed.

Gasoline stockpiles in the U.S. increased by 2.76 million barrels last week, the API data showed. They are forecast to rise by 2 million in the government report, according to the median estimate of 11 analysts in the Bloomberg News survey. Distillate inventories, a category that includes diesel and heating oil, rose by 2.24 million barrels compared with an estimate for the Energy Department data of 1.1 million.

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.

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