Oil caps biggest weekly increase in two months

Oil in New York rose, capping its biggest weekly gain in two months, as U.S. economic reports signaled that growth in the world’s biggest crude-consuming country will accelerate.

Futures gained 6.6% this week, the biggest gain since Oct. 28, as durable goods rose in November by the most in four months. Initial jobless claims fell to the lowest level since April 2008 and leading indicators advanced more than forecast last month, data showed yesterday.

“Recent U.S. economic data has been has been more positive than negative lately,� said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “This has a set a more positive tone for the market going into the New Year.�

Crude oil for February delivery rose 15 cents to $99.68 a barrel on the New York Mercantile Exchange, the highest settlement since Dec. 13. Futures have climbed 9.1% this year after increasing 15% in 2010.

Nymex energy contracts closed at 1:30 p.m. New York time because of the Christmas holiday. Electronic trading begins at 6 p.m. on Dec. 26 and floor trading at 9 a.m. Dec. 27.

Brent oil for February settlement gained 7 cents to end the session at $107.96 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to Nymex crude narrowed to $8.28 a barrel, the smallest differential based on closing prices since March 8. The spread surged to a record $27.88 on Oct. 14.

Sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market. Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, figures from the Commerce Department showed today in Washington.

U.S. initial unemployment claims fell by 4,000 to 364,000 last week, Labor Department figures showed yesterday. The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent, versus a median forecast of 0.3 percent in a Bloomberg survey. The Thomson Reuters/University of Michigan final index of consumer sentiment increased more than expected in December.

The U.S. Congress passed a two-month payroll tax cut extension a day after House Republicans surrendered on whether to endorse the measure days before its scheduled Dec. 31 expiration.

“The passage of the payroll tax extension is certainly supportive,� said Kyle Cooper, director of research for IAF Advisors in Houston. “Equities will remain the main driver of the oil market and we’ve also had some very supportive inventory numbers recently.�

U.S. crude oil stockpiles fell 10.6 million barrels last week, the largest decrease since February 2001, an Energy Department report on Dec. 21 showed.

Volume on the Nymex totaled 136,876 contracts as of 2:03 p.m. Volume was 281,092 yesterday, the lowest level since Dec. 29, 2010, and 56 percent below the average of the last three months. Open interest was 1.31 million contracts.

“Low volume could exaggerate any movement through the end of the year,� Cooper said.