Oil Trades Near $71 After Advancing on U.S. Industrial Output

Dec. 16 (Bloomberg) -- Oil traded near $71 a barrel in New York after rising for the first time in 10 days on a report that U.S. factories churned out more goods in November than anticipated, a signal that fuel demand will increase.

Oil snapped the longest decline since 2001 yesterday as the Federal Reserve said that output at factories, mines and utilities climbed 0.8 percent in November, the fourth increase in five months. Germany’s Ifo economic institute raised its 2010 outlook for growth in Europe’s biggest economy.

“The industrial production number is definitely a sign that the economy is improving, and it should lead to higher demand for oil and energy,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.

Crude oil for January delivery traded at $70.85 a barrel, up 16 cents, in electronic trading on the New York Mercantile Exchange at 10:24 a.m. Sydney time. Yesterday, the contract rose $1.18, or 1.7 percent, to settle at $70.69. Futures have climbed 59 percent this year.

Oil prices pared gains after the American Petroleum Institute reported at 4:33 p.m. that crude inventories rose by 924,000 million barrels last week. The U.S. Energy Department will release its weekly supply report today in Washington. Supplies are forecast to decline, a Bloomberg News survey shows.

Oil-supply totals from the API and Energy Department moved in the same direction 75 percent of the time in the past four years, according to data compiled by Bloomberg.

Higher Production

The Organization of Petroleum Exporting Countries, responsible for about 40 percent of global oil supply, raised the estimate for the amount of crude its members will have to pump next year as consumption recovers.

The group will need to produce 28.61 million barrels a day to satisfy demand in 2010, it said in an e-mailed report yesterday. That’s about 100,000 barrels a day more than last month’s projection and represents an increase of 30,000 barrels a day from 2009, the first annual gain in three years.

OPEC will hold its fourth and final meeting of 2009 next week in Angola. At previous gatherings this year members have called for better implementation of the 4.2 million barrels a day of cuts announced in 2008.

U.S. oil inventories probably fell 2 million barrels last week from 336.1 million in the week ended Dec. 4, based on the median estimate of 17 analysts surveyed by Bloomberg News. All but one analyst predicted a decline.

Brent crude oil for January settlement gained 16 cents to settle at $72.05 a barrel on the London-based ICE Futures Europe exchange yesterday.