Oil Rises Above $96 a Barrel on Speculation U.S. Supplies Fell

By Angela Macdonald-Smith


Jan. 2 (Bloomberg) -- Crude oil rose above $96 a barrel in New York amid speculation that a U.S. government report will show stockpiles fell last week as refiners increased processing rates to make fuel.

U.S. oil inventories probably dropped for a seventh straight week last week, a Bloomberg News survey indicated before a Department of Energy report due tomorrow. Supplies fell to the lowest in almost three years in the week ended Dec. 21 because of a drop in inventories in states along the Gulf Coast.

``If those numbers continue to run to the negative, that could be a factor that will put upward pressure on oil prices,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

Crude oil for February delivery rose as much as 0.4 percent to $96.39 a barrel and was at $96.25 in after-hours electronic trading on the New York Mercantile Exchange at 7:20 a.m. in Singapore. On Dec. 31 the contract fell 2 cents to $95.98, bringing the gain for last year to more than $35 a barrel, or 57 percent, the biggest annual percentage increase since 2002. New York futures reached a record $99.29 on Nov. 21 as a weaker dollar made crude cheaper in other currencies.

Brent crude for February settlement on Dec. 31 fell 3 cents to $93.85 a barrel on London's ICE Futures Europe exchange. The London benchmark rose 54 percent last year, the most since 1999 when prices more than doubled. The New York and London exchanges were closed yesterday for the New Year's Day holiday.

U.S. crude oil stockpiles probably dropped 3.15 million barrels in the week ended Dec. 28 from 293.6 million barrels the week before, according to the median of responses by four analysts before the Energy Department report. All the analysts said supplies dropped.

Forecasts for a mild Northern Hemisphere winter may help temper any price gains, Commonwealth's Moore said. AccuWeather.com is predicting mild temperatures on the U.S. East Coast through mid-January. New York may be as warm as 52 degrees Fahrenheit (11 Celsius) next week, compared with a normal high of 38 degrees.