Crude oil rose for a fifth day on speculation demand will increase as the world economy recovers from recession.
Oil traded above $85 a barrel as a Conference Board report tomorrow in the U.S., the world’s largest energy user, will probably show consumer confidence climbed to a three-month high. Asian stock markets rose by the most in five weeks on expectations of higher earnings at Toyota Motor Corp. in Japan.
“People are becoming more bullish on oil demand growth,” said Serene Lim, an energy commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The more positive world economic data, especially in the U.S. data, is bringing about more optimism.”
Crude oil for June delivery rose as much as 44 cents, or 0.5 percent, to $85.56 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $85.53 at 3:08 p.m. in Singapore.
The MSCI Asia Pacific Index climbed 1.5 percent to 127.20 as of 3:15 p.m. in Tokyo, with more than five times as many stocks advancing as declining.
Oil climbed 1.7 percent to $85.12 on April 23, the highest settlement since April 15, after government reports showed that U.S. sales of new homes surged in March and orders for non-transport durable goods climbed. Commodities had rallied as the dollar fell against the euro for the first time in seven days.
A Commerce Department report on April 23 showed that sales of new U.S. homes increased 27 percent in March, the most in 47 years. Bookings for goods meant to last at least three years, excluding cars and aircraft, climbed 2.8 percent.
“Data on the economic side, especially in the U.S., are getting much, much better than expected,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo. “The gasoline demand season is just starting in the U.S. so I’m not really pessimistic about the high inventory levels” there, he said.
Crude prices are also finding support as Greece may secure an emergency aid package “rather soon,” the country’s Finance Minister George Papaconstantinou said yesterday in Washington.
The dollar index, a measure of the greenback against six major currencies, was little changed at 81.42 today after falling 0.3 percent on April 23. A weaker dollar bolsters the appeal of commodities as an alternative investment.
“The Greek Minister was saying that the aid will arrive in time so that helps to pull up the euro against the U.S. dollar and that pushes oil prices higher,” said ANZ’s Lim.
U.S. crude oil inventories unexpectedly climbed 1.89 million barrels to 355.9 million in the week ended April 16, according to a Department of Energy report.
While the overall level of inventories is high, the pattern of movements is similar to recent years, Astmax’s Emori said. The direction from here will be more important than the absolute level, and oil is likely to be sustained between $80 and $90 a barrel for the rest of the year, he said.
“Ninety could be reachable, but over $90 to $95 would probably be difficult unless there are more strong factors on the fundamental side appearing,” he said.
Hedge-fund managers and other large speculators increased their bets on rising oil prices in the week ended April 20, according to U.S. Commodity Futures Trading Commission data.
Speculative net-long positions, the difference between orders to buy and sell the commodity, increased 7 percent to 121,475 contracts on the New York Mercantile Exchange, the Washington-based commission said last week.
Brent crude oil for June settlement rose as much as 47 cents, or 0.5 percent, to $87.72 a barrel on the London-based ICE Futures Europe exchange. It was at $87.64 at 3:10 p.m. Singapore time. It climbed 1.8 percent to $87.25 on April 23.
Brent is trading at a $2.19 a barrel premium to the New York-traded West Texas Intermediate futures as stockpiles at the U.S. contract’s Cushing, Oklahoma, delivery jumped 5.8 percent in week ended April 16 to 34.1 million barrels. That’s the highest since the week ended Jan. 8.