Oil gained for a second day in New York on signs that the economic recovery is accelerating in the U.S., the world’s biggest energy consumer.
Oil advanced as European and Asian stocks climbed before reports that may show American services industries picked up last month. The American Petroleum Institute said last week’s gasoline supplies fell to the lowest this year.
“The global economic recovery is continuing and most economic indicators are surprising to the upside,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “Oil markets have overshot to the downside over the past weeks and we are seeing a bit of a rebound now.”
Crude oil for July delivery increased as much as $1.54, or 2.1 percent, to $74.40 a barrel in electronic trading on the New York Mercantile Exchange, and was at $73.19 at 12:34 p.m. London time. Yesterday, the contract rose 28 cents, or 0.4 percent, to settle at $72.86.
Brent crude for July settlement gained as much as $1.50, or 2 percent, to $75.25 a barrel on the London-based ICE Futures Europe exchange, and was at $74.17 at 12:34 p.m. in London. Yesterday, the contract rose $1.04, or 1.4 percent, to $73.75.
Service industries in the U.S. expanded in May at the fastest pace in four years, showing the recovery is broadening as employment improves, economists said before reports today.
The Institute for Supply Management’s index of non-manufacturing businesses, which covers almost 90 percent of the U.S. economy, rose to 55.6 from 55.4 in April, according to a Bloomberg News survey of economists before the report at 10 a.m. in New York. Other reports may show firings eased and private payrolls rose.
The MSCI World Index, a gauge of equities in 24 developed nations, climbed 1.1 percent at 12:16 p.m. in London. Futures on the Standard & Poor’s 500 Index rose 0.3 percent after gaining as much as 0.7 percent.
Brent’s premium to West Texas Intermediate futures traded in New York has widened to 95 cents a barrel today from 5 cents on May 28. Concerns about excess stockpiles at the Cushing, Oklahoma, delivery point for WTI contracts has pushed the European benchmark higher.
Cushing supplies fell in the week ended May 21 for the first time in 10 weeks, by 324,000 barrels to 37.6 million barrels after rising to a record the previous week.
“It will be really important for WTI if we get a decrease at Cushing,” said Merath of Credit Suisse. “That will be watched very closely.”
U.S. crude supplies fell 1.42 million barrels last week to 362.7 million barrels, the API said yesterday. An Energy Department report today may show stockpiles were unchanged. U.S. gasoline inventories declined 962,000 barrels last week, according to the report. The stockpiles fell to 217.2 million barrels before the Memorial Day holiday weekend, the start of the U.S. summer driving season.
Today’s Energy Department report will probably show supplies of the motor fuel dropped 500,000 barrels last week from 221.6 million the prior week, a fourth consecutive decline, according to a Bloomberg News survey.
Holiday Gasoline Sales
Gasoline demand in the U.S. at the pump surged 3.7 percent last week to the highest level since August 2007 as drivers filled their tanks for the Memorial Day weekend, MasterCard Inc. reported yesterday. Motorists bought an average 9.71 million barrels of gasoline a day in the week ended May 28, MasterCard said in its SpendingPulse report.
The Energy Department is scheduled to release its weekly report today, a day later than usual because of the Memorial Day holiday. The Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.