Oct. 12 (Bloomberg) -- Oil advanced to trade near its highest in three weeks in New York on speculation that European Union proposals on bank recapitalization will support economic growth and fuel consumption.
Futures rose for a sixth day, their longest winning streak this year. European Commission President Jose Barroso is due to outline plans in Brussels today. The International Energy Agency, which cut its global oil demand forecast for 2012, said recent data doesn’t signal a “downward consumption spiral.”
“There’s relief about the risk in the EU,” said Thorbjorn Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark, who forecasts Brent will average $107 a barrel this quarter. “On a longer horizon, inflation expectations and recovered growth after the sovereign debt problems have been solved will support oil prices.”
Crude for November delivery on the New York Mercantile Exchange rose as much as 78 cents, or 0.9 percent, to $86.59 a barrel and was at $86.27 at 12:40 p.m. London time. The contract yesterday climbed as high as $86.64, the highest price since Sept. 21. Prices are down 5.4 percent this year.
Brent oil for November settlement rose $1.13 to $111.86 on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of as much as $25.60 to U.S. crude, the most since Sept. 15 and down from a record of $26.87 on Sept. 6.
IEA Cuts Forecast
The Paris-based IEA reduced estimates for world demand in 2012 by 210,000 barrels a day, to 90.5 million a day. That means consumption will increase by 1.3 million barrels a day, or 1.4 percent, from this year. Oil inventories in industrialized nations fell below their five-year average for the first time in more than three years, according to the IEA.
“There’s still robust growth but it’s being affected by this economic slowdown,” David Fyfe, head of the IEA’s industry and markets division, said in an interview with Maryam Nemazee on Bloomberg Television’s “The Pulse.” The IEA doesn’t “think the balance of probabilities has tipped towards that much weaker picture of economic growth for next year.”
U.S. crude-oil stockpiles probably rose by 800,000 barrels last week, according to the median of 15 analyst estimates in a Bloomberg News survey before a weekly Energy Department report tomorrow. The industry-funded American Petroleum Institute publishes its weekly figures today. Both sets of data are being released a day later than usual because of this week’s Columbus Day holiday.
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