Oil erased earlier losses as a jump in German business confidence tempered concerns that fuel demand in the U.S. remains constrained by slack economic growth. Prices may drop next week on speculation that U.S. inventories will climb as fuel demand declines, a Bloomberg News survey showed. Yesterday the Labor Department reported claims unexpectedly increased by 12,000 to 465,000 in the week ended Sept. 18, as the unemployment rate holds near a 26-year high. “We’ve got enough oil, we need to see more confidence going through the economy,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. The November contract on the New York Mercantile Exchange was at $75.30 a barrel, 12 cents higher, at 9:08 a.m. London time after losing as much as 52 cents, or 0.7 percent, to $74.66 a barrel. Brent crude for November settlement gained 12 cents to $78.23 a barrel on the London-based ICE Futures Europe exchange. The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 106.8 from 106.7 in August. That’s the highest since June 2007. Economists had expected a drop to 106.4, according to the median of 36 forecasts in Bloomberg News survey. Seventeen of 30 analysts, or 57 percent, forecast crude oil will decline through Oct. 1. Nine respondents, or 30 percent, predicted little change, and four estimated prices will rise. Last week, 52 percent said crude would decrease. Tropical Storm Tropical Storm Matthew formed in the Caribbean Sea east of Nicaragua and may grow into a hurricane by next week, as Tropical Storm Lisa re-emerged in the central Atlantic, the U.S. National Hurricane Center said yesterday. Total consumption of petroleum products averaged 19.2 million barrels a day last week, down 1.8 percent from the seven days ended Sept. 10, the Energy Department reported Sept. 22. U.S. oil stockpiles rose 970,000 barrels to 358.3 million last week. They were forecast to drop 1.75 million barrels, according to the median of analyst estimates in a Bloomberg News survey. Futures may drop as low as $71.50 a barrel in a short-term consolidation period, according to technical indicators used by traders to predict price movements. Oil will fall toward intraday lows of $74.25 a barrel reached on Sept. 7 and $73.10 on Aug. 31, said Stephanie Aymes, a London-based cross-commodity technical analyst at Societe Generale SA. The top range of crude’s consolidation is $76.25 a barrel, which is close to the 38.2 percent Fibonacci retracement of the contract’s drop from its $83.91 high on Aug. 4 to $71.49 on Aug. 25. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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