March 23 (Bloomberg) -- Crude oil rose to the highest in almost four months as the U.S. stock market advanced, signaling that fuel use in the world’s biggest energy-consuming country will rebound.

Oil climbed 3.3 percent after equities increased on speculation that the Obama administration’s plan to rid banks of distressed assets will spur growth. Stock and commodity markets extended gains after a report showed that U.S. sales of previously owned homes unexpectedly climbed in February.

“Oil is moving higher with the stock market today on the announcement of a plan to buy toxic assets,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington.

Crude oil for May delivery rose $1.73 to $53.80 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the highest settlement since Nov. 28. Prices are up 21 percent this year.

The Standard & Poor’s 500 Index increased 7.1 percent to 822.92, the biggest increase since Oct. 28. The Dow Jones Industrial Average rose 6.8 percent to 7,775.86. The MSCI World Index climbed for the ninth time in 10 days, adding 5.4 percent.

“We’ve had a number of bullish news items that are giving the market a boost today,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “I’m looking at the impact of the Treasury plans on stock markets and the dollar. This is how it will impact the commodity markets.”

Home Buying

Home purchases increased 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington.

“This is a macro-economic story,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “There are now details about the Treasury plan to buy distressed assets. There is going to be additional massive expenditure, which will keep pressure on the dollar.”

The Treasury plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees, the Treasury said in a statement in Washington.

The announcement provides details on an initial strategy laid out by Treasury Secretary Timothy Geithner last month, which caused a slump in stocks because it lacked an explanation of how the effort would work.

“Geithner finally gave us a defined plan, something people have been waiting for,” said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. “There’s great anecdotal evidence that the economy has hit bottom.”

Brent Crude

Brent crude oil for May settlement advanced $2.25, or 4.4 percent, to $53.47 a barrel on London’s ICE Futures Europe exchange. Prices ended the session at the highest level since Nov. 28.

Suncor Energy Inc., the world’s second-largest oil-sands producer, agreed to buy Petro-Canada for C$19.3 billion ($15.6 billion) in a record takeover that will create the biggest Canadian energy company. It will yield savings and help Suncor shoulder high-cost oil-sands projects in northern Alberta.

“The market is getting a boost from the Suncor takeover of Petro-Canada,” Edmonds said. “It shows that someone is willing to make a long-term bet that prices will recover.”

OPEC Output

The Organization of Petroleum Exporting Countries has reduced daily output targets by 4.2 million barrels since September in an effort to increase prices. The group held quotas steady at a meeting on March 15, pledging that members will tighten compliance with previous agreements.

“OPEC has succeed so far in supporting prices,” Sieminski said. “They’ve got to be vigilant about cheating and there can be no backsliding as far as compliance is concerned.”

OPEC, the International Energy Agency and the U.S. Energy Department cut their 2009 forecast for oil demand this month. OPEC, the IEA and DOE see consumption slumping more than 1 million barrels a day this year.

Gasoline futures for April delivery increased 3.11 cents, or 2.1 percent, to $1.4881 a gallon in New York, the highest settlement since Nov. 4.

Heating oil for April delivery gained 8.73 cents, or 6.3 percent, to end the session at $1.4707 a gallon, the highest since Jan. 16.

Commodities Investment

Michael Aronstein, the strategist who predicted last year’s commodities collapse, is putting 20 percent of the money he manages into raw materials in a bet that prices have bottomed. Aronstein started buying metals, agriculture and energy futures this month for the $115 million fund he helps manage at Oscar Gruss & Son Inc. in New York.

The Reuters/Jefferies CRB Index of 19 prices rose as much 3.46, or 1.5 percent, to 229.54, the highest since Jan. 26.

Crude oil volume in electronic trading on the Nymex was 358,610 contracts as of 2:57 p.m. in New York. Volume totaled 351,763 contracts March 20, the lowest since Jan. 2, and 35 percent lower than the average over the past three months.

Open interest on March 20 was 1.15 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.

To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: March 23, 2009 16:34 EDT