VINACHEM

Oil advanced for a second day in NewYork after Israel said it may expand an assault on the Gaza Strip and U.S. House Speaker John Beohner signaled budget talkswith President Barack Obama were constructive.

Futures climbed as much as 0.9 percent after Israeli PrimeMinister Benjamin Netanyahu said yesterday that the army isprepared to “significantly widen the operation,” raisingconcern Middle East unrest will disrupt oil supplies. Obama andcongressional leaders met Nov. 16 to discuss how to avert thefiscal cliff, a combination of spending cuts and tax increasesthat threaten to throw the world’s biggest crude user into arecession next year.

“The market is concerned about an escalation to theconflict in Israel,” said Jonathan Barratt, the chief executiveofficer of Barratt’s Bulletin, a commodity newsletter in Sydney.“Nervousness about the Middle East is forcing the hand of a fewshort positions,” or wagers on falling prices, he said.

Crude for January delivery rose as much as 76 cents to$87.68 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.60 at 11:46 a.m. Sydney time. Thecontract increased $1.05 to $86.92 on Nov. 16 to cap a secondweekly gain. Front-month prices are down 11 percent this year.

Brent for January settlement gained 62 cents, or 0.6percent, to $109.57 a barrel on the London-based ICE FuturesEurope exchange. The European benchmark contract was at a premium of $21.97 to West Texas Intermediate.

Israel Attack

Israeli ground forces are poised to invade the Gaza Stripfor the first time in almost four years amid efforts by Egyptand Turkey to help end the rocket battles that have killed 71Palestinians and three Israelis.

“We will continue to act, to attack and perhaps even tointensify the operation,” Defense Minister Ehud Barak saidduring an appearance near Tel Aviv yesterday, according to an e-mailed statement. “If there is a need, we won’t hesitate toundertake ground maneuvers.”

The assault threatens a region still unbalanced after awave of popular uprisings last year, including one in neighborSyria that has become a civil war. Israel says its military goalis to make Palestinians in Gaza stop firing the rockets thathave killed three Israeli civilians.

Money managers cut bullish bets on crude oil by 18 percentto 100,021 contracts in the week ended Nov. 13, the biggestreduction since May, according to data from the CommodityFutures Trading Commission.