Crude Oil Rises From Lowest Level in a Week Amid Improved Demand Outlook

Oil rose from the lowest level in a week after the U.S. economy grew more than previously estimated in the third quarter, adding to signs inventories may shrink.

Crude reversed earlier declines as the dollar weakened against the euro, making commodities priced in the U.S. currency cheaper for investors. Oil has dropped 7.9 percent after reaching its highest level this year on Nov. 11, prompting futures purchases.

“On a price standpoint, we’ve come down quite a bit very quickly so we are finding support around $80,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “It got cheap enough that people are buying. People still think the U.S. needs more like 3 percent growth to add jobs but it is moving in the right direction.”

Futures gained as much as 63 cents, or 0.8 percent, to $81.88 a barrel on the New York Mercantile Exchange. The January contract was at $81.70 at 3:29 p.m. Singapore time.

U.S. crude stockpiles probably declined 2 million barrels last week, dropping to their lowest level in three months as refinery demand increased with the end of seasonal maintenance, according to a Bloomberg News survey before an Energy Department report today.

Yesterday, oil fell 49 cents, or 0.6 percent, to $81.25, the lowest settlement since Nov. 17. Prices are up 3 percent this year. Crude climbed to its highest intraday price this year of $88.63 on Nov. 11.

U.S. GDP

The revised 2.5 percent increase in U.S. gross domestic product compares with a 2 percent estimate issued last month and a 1.7 percent rise in the second quarter, figures from the Commerce Department showed yesterday in Washington. Consumer purchases rose at the fastest pace since the last three months of 2006.

The U.S. is the world’s largest oil consumer. The country used an average of 19.3 million barrels a day of fuels in the four weeks ended Nov. 12, up 3.7 percent from last year, Energy Department data show.

“There were relatively good numbers out of the U.S. in terms of GDP and a little bit of dollar weakness, and that’s certainly helping crude go higher,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney.

The Dollar Index, operated by Intercontinental Exchange, fell as much as 0.3 percent to 79.44, reversing two days of gains on sovereign-debt default concern in Europe. The index measures the greenback against six major currencies.

Brent crude for January settlement rose as much as 57 cents, or 0.7 percent, to $83.82 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it dropped 71 cents, or 0.9 percent, to $83.25.

U.S. Inventories

The American Petroleum Institute reported late yesterday that U.S. crude-oil stockpiles increased 5.19 million barrels to 357.7 million.

The industry funded group said gasoline supplies dropped 499,000 barrels to 214.1 million. Distillate fuel inventories, including diesel and kerosene, fell by 311,000 barrels to 157.3 million barrels.

U.S. crude inventories probably declined 2 million barrels, or 0.6 percent, last week from 357.6 million a week earlier, according to the median of 16 analysts in a Bloomberg News survey before an Energy Department report today. It is scheduled to be released at 10:30 a.m. in Washington. (Source: Bloomberg)