June 3 (Bloomberg) -- Crude oil rose to a three-week high after a report showed that U.S. gasoline inventories declined as fuel consumption surged.
Gasoline supplies fell 2.65 million barrels to 219 million, the lowest level this year, the Energy Department report showed. Stockpiles were forecast to drop by 500,000 barrels, according to the median of 17 analyst responses in a Bloomberg News survey. Fuel demand increased 1.6 percent to 20 million barrels a day, the highest level since Jan. 30, 2009.
“We’re getting good support from the gasoline market,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, consulting firm. “The DOE reported a gasoline draw of more than 2.5 million barrels.”
Crude oil for July delivery increased $1.75, or 2.4 percent, to $74.61 a barrel on the New York Mercantile Exchange, the highest settlement since May 12. Prices are down 6 percent this year and up 13 percent from a year ago.
Gasoline climbed 5.51 cents, or 2.7 percent, to end the session at $2.0812 a gallon in New York. It was the highest settlement since May 14.
Demand for the motor fuel increased 0.8 percent to 9.17 million barrels a day in the week ended May 28, the report showed. Gasoline consumption was up 1.7 percent from the same week last year.
“Gasoline demand exceeds last year’s levels and prices are set to move higher this summer,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “This will support crude oil.”
Total fuel demand during the last week of May topped 21 million barrels a day in 2006 and 2007.
‘Sign of Improvement’
“Demand rose above 20 million barrels a day for the first time since January last year,” said Kyle Cooper, managing director at IAF Advisors in Houston. “Demand is still weak for this time of year by historical standards, but this is a definite sign of improvement.”
Consumption of all fuels climbed 8.1 percent to 19.7 million barrels a day from a year ago in the four weeks ended May 28, according to the Energy Department.
Supplies of crude oil fell 1.9 million barrels to 363.2 million last week. Inventories were forecast to be unchanged, according to the median of estimates in a Bloomberg News survey.
Stockpiles of crude oil at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, rose 0.7 percent to 37.9 million barrels, the second-highest level since the Energy Department started keeping records at the storage hub in 2004.
Prices also gained after the federal government said that producers will have to resubmit plans to drill in Gulf of Mexico waters less than 500 feet deep.
The Obama administration is “pulling back” exploration plans and requiring updated information to “ensure that new safety standards and risk considerations are incorporated,” Bob Abbey, acting director of the Minerals Management Service, said in a statement issued yesterday.
Officials said today that such operations aren’t covered by the six-month moratorium placed on deepwater drilling operations such as the BP Plc well that exploded on April 20 in the Gulf.
The dollar strengthened to $1.2157 per euro, up 0.8 percent from $1.2249 yesterday. The common currency has slumped 15 percent against the greenback this year as concern mounts that Greece’s debt crisis may spread to other nations using the euro. A strong greenback typically curbs demand for commodities as an alternative investment.
“The dollar is getting stronger at the same time as oil, which implies that the correlation between the two is breaking down again,” said Hamza Khan, an analyst with consultant Schork Group Inc. in Villanova, Pennsylvania. “We’re now looking at the product market instead of the dollar for direction.”
Oil also rose on signals that the U.S. economic recovery is accelerating. The number of Americans making initial jobless claims fell by 10,000 to 453,000, the Labor Department said today in Washington. Economists projected claims would drop to 455,000, according to the median of 42 forecasts in a Bloomberg News survey.
Figures due tomorrow may show payrolls climbed by 515,000 in May, boosted by hiring for the census, according to a Bloomberg News survey. The unemployment rate probably fell to 9.8 percent in May from 9.9 percent the prior month.
“If the jobless numbers tomorrow are as positive as expected, the oil market will be right back in the saddle and move to new highs,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
Brent crude for July settlement gained $1.66, or 2.3 percent, to end the session at $75.41 a barrel on the London-based ICE Futures Europe exchange. It was the highest settlement since May 14.
Oil volume in electronic trading on the Nymex was 811,075 contracts as of 3:50 p.m. in New York. Volume totaled 726,248 contracts yesterday, 3.9 percent below the average of the past three months. Open interest was 1.34 million contracts.
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