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WTI Crude Advances First Time in Three Days as Equities Rebound

Jan. 28 (Bloomberg) -- West Texas Intermediate crude advanced for the first time in three days, gaining with equities on rising consumer confidence and signs of an improving U.S. housing market.

Futures rose as much as 2 percent. The Standard & Poor’s 500 Index also gained as the Conference Board’s index of consumer confidence climbed in January and the S&P/Case-Shiller index of property prices in 20 cities rose in November from a year ago by the most in almost eight years. A government report today showing that orders for durable goods slumped in December may encourage the Federal Reserve to reduce its bond buying more slowly. The Fed started a two-day meeting today.

“Crude is up on the combination of a rebound in equities and the poor durable goods,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The durable goods data reduces the chances of the Fed aggressively tapering stimulus.”

WTI for March delivery rose $1.71, or 1.8 percent, to $97.43 a barrel at 10:57 a.m. on the New York Mercantile Exchange. The price reached $97.66. The volume of all futures traded was 5.8 percent lower than the 100-day average.

Brent for March settlement advanced 93 cents, or 0.9 percent, to $107.62 a barrel on the London-based ICE Futures Europe exchange. Volume was 2.2 percent below the 100-day average. The European benchmark grade traded at a $10.19 premium to WTI, down from $10.97 yesterday. The spread narrowed to as little as $9.84 during trading.

The S&P 500 Index and the Dow Jones Industrial Average increased 0.4 percent.

Consumer Confidence

The Conference Board’s consumer confidence index rose to 80.7 in January from a revised 77.5 in the prior month, the New York-based private research group said today. The median forecast in a Bloomberg survey of 79 economists called for a reading of 78. The S&P/Case-Shiller index climbed 13.7 percent in November from a year earlier, the biggest 12-month gain since February 2006, a report from the group showed today in New York.

Bookings for goods meant to last at least three years fell 4.3 percent after a 2.6 percent gain in November that was smaller than previously reported, a Commerce Department report showed today in Washington. The median estimate of 82 economists surveyed by Bloomberg was a 1.8 percent advance.

The Fed begins its final monetary policy meeting under Chairman Ben S. Bernanke today, who leaves his post on Jan. 31. The central bank will probably reduce its monthly bond purchases in $10 billion increments over the next six meetings before announcing an end to the program no later than December, according to a Bloomberg survey this month.

Fed Meeting

“There’s been a strong correlation between oil and equities recently,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Investors are looking at the equity market as a demand indicator. We’re also waiting for the Federal Reserve to see if they will announce more tapering.”

The spread between WTI and Brent approached the narrowest level in more than two months on speculation that cold weather in the U.S. will bolster demand for barrels at Cushing, Oklahoma, the delivery point for crude traded on the Nymex.

“The spread is being pushed by greater weather-related demand for U.S. crude,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “More crude is flowing out of Cushing to meet refinery demand for distillate production.”

Winter Storm

A rare winter storm is bringing heavy snow and ice to parts of the Deep South today as temperatures continue to drop across the U.S. behind an arctic front sweeping the country. The system will extend from the central Gulf Coast to the southern mid- Atlantic coast today, the National Weather Service said in a bulletin.

An Energy Information Administration report tomorrow will probably show that nationwide crude supplies rose 2.25 million barrels last week to 353.5 million, according to the median of 10 analyst estimates in a Bloomberg survey. Supplies of distillate fuel, a category that includes heating oil and diesel, slipped 2.55 million to 118.2 million, the survey showed.

The EIA, the Energy Department’s statistical arm, will release its report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute is scheduled to publish separate stockpile data at 4:30 p.m. today.

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