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Oil Caps Longest Run of Weekly Gains in 14 Months on Debt Vote

Jan. 18 (Bloomberg) -- Oil capped the longest weekly winning streak in 14 months in New York as House Republicans planned a vote next week on a three-month extension of the U.S. borrowing authority.

Prices rose 7 cents as the Republicans dropped their insistence that a short-term continuation be accompanied by a dollar-for-dollar government spending cut. Economic growth accelerated in China, the world’s second-biggest oil-consuming country. Oil fell earlier as the euro weakened versus the dollar and U.S. consumer sentiment unexpectedly declined.

“The debt ceiling is definitely what’s moving the market right now,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “We keep pushing everything off to forget about it right now and worry about it later. China’s GDP number is quite solid. The path of least resistance for oil is higher.”

West Texas Intermediate crude for February delivery increased to $95.56 a barrel on the New York Mercantile Exchange, the highest settlement since Sept. 17. Prices advanced 2.1 percent since Jan. 11, the sixth weekly gain and the longest streak since November 2011.

Brent for March settlement rose 79 cents, or 0.7 percent, to $111.89 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $15.86 to WTI futures for the same month. The gap was $15.16 yesterday, the narrowest closing level since July 24.

WTI trading volume was 8.3 percent above the 100-day average at 3:24 p.m. in New York. Brent volume was 3.4 percent more than the average.

Debt Ceiling

The Treasury Department has said the U.S. will exceed its $16.4 trillion borrowing authority sometime between mid-February to early March.

House Speaker John Boehner said the Republican leadership is trying to force the Democratic-controlled Senate to adopt a budget plan. Majority Leader Eric Cantor of Virginia said in a statement that members of Congress won’t be paid if the House or Senate doesn’t pass a budget by the end of the proposed three- month debt-limit increase.

“We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem,” Boehner, a Republican from Ohio, said in a statement today.

Oil also gained as China’s gross domestic product rose 7.9 percent in the fourth quarter from a year earlier, compared with 7.4 percent in the previous period, the National Bureau of Statistics in Beijing reported today. The growth rate beat the 7.8 percent median estimate in a Bloomberg survey.

Chinese Growth

“The data out of China have been good and people are continuing to be more bullish about the economy,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Oil advanced 1.3 percent yesterday, the biggest one-day gain since Jan. 2, after U.S. builders broke ground on more houses than forecast and jobless claims dropped to a five-year low.

“We had already priced in a lot of the economic data,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy.

The International Energy Agency boosted its 2013 global demand forecast by 240,000 barrels a day today because of stronger growth expectations for China. World consumption will average a record 90.8 million.

China will use 390,000 barrels a day, or 4 percent, more oil this year than in 2012, to reach 10 million a day, according to the adviser to energy-consuming nations.

Euro Declines

Oil touched an intraday low of $94.91 a barrel as the euro declined. Europe’s shared currency dropped as much as 0.7 percent to $1.328. A weaker euro and stronger dollar reduce dollar-denominated oil’s appeal as an investment alternative.

“We are seeing some money being taken off the table after yesterday’s run-up,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Certainly the dollar strength is bearish for oil.”

The Thomson Reuters/University of Michigan preliminary January consumer sentiment index decreased to 71.3 from 72.9 the prior month. The gauge was projected to climb to 75, according to the median forecast of 74 economists surveyed by Bloomberg.

“The market is going to move back and forth on economic indicators,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The strong dollar probably prompted a little bit of profit-taking.”

Oil Demand

U.S. oil demand fell to the lowest level in 16 years in 2012 while domestic output surged the most in more than 150 years, the American Petroleum Institute said today.

Total petroleum deliveries, a measure of demand, dropped 2 percent from 2011 to 18.6 million barrels a day last year, the lowest level since 1996, the industry-funded group said in a monthly report today.

Electronic trading volume on the Nymex was 481,249 contracts as of 3:24 p.m. Volume totaled 730,459 contracts yesterday, 49 percent above the three-month average. Open interest was 1.51 million.

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