Oil Advances as Earnings Boost Confidence in Economic Rebound

Oil climbed for a third day in New York as better-than-estimated earnings boosted confidence in the strength of the economic rebound, signaling that fuel demand will increase.

Futures rose 0.8 percent and stocks extended this year’s biggest global rally after Apple Inc. said yesterday second-quarter profit almost doubled. The dollar dropped to a 16-month low against the euro, bolstering demand for raw materials. Oil also gained after a report yesterday showed that U.S. crude-oil supplies fell for the first time since February.

“We have bullish information going into a long weekend,” said Jason Schenker, president of Prestige Economics, an energy advisory firm in Austin, Texas. “The dollar continues to weaken, yesterday’s report was bullish for oil across the board and the overall economic outlook is improving.”

Crude oil for June delivery rose 84 cents to $112.29 a barrel on the New York Mercantile Exchange, the highest settlement since April 8. Prices are up 34 percent in the past year. The June contract climbed 1.9 percent this week.

Brent crude oil for June settlement increased 14 cents to end the session at $123.99 a barrel on the London-based ICE Futures Europe exchange.

Trading on both the Nymex and ICE will be closed tomorrow for the Easter holiday. Aggregate trading volume was 383,655 contracts at 3:30 p.m. compared with the one-year daily average of 713,000.

‘Magnified’ Moves

“Any move in the market today may be magnified because there is no volume behind it,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “A lot of people are off because of the holiday weekend.”

The Dow Jones Industrial Average climbed 26.91 points to 12,480.45, and the Standard & Poor’s 500 Index advanced 0.5 percent to 1,335.40 at 3:27 p.m.

The dollar fell 0.2 percent to $1.4548 against the euro, after slipping to $1.4649, the weakest level since December 2009. A drop in the dollar makes commodities priced in the currency more attractive for investors.

“What happens in the oil market now depends on the dollar,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “The correlation between the dollar and oil broke down late last year, but has reignited this month.”

The Thomson Reuters/Jefferies CRB Index of 19 raw materials climbed 0.5 percent to 367.44. Gold for June delivery increased $4.90, or 0.3 percent, to settle at a record $1,503.80 an ounce on the Comex in New York. The precious metal reached $1,509.60, a record intraday high.

Demand Pickup

“Oil’s gaining today from a combination of the strong euro and continuing good news from the stock markets,” said Robert Montefusco, senior broker at Sucden Financial in London. “Yesterday’s Energy Department numbers helped a lot, and we should get a pickup in demand over the next month as the holidays approach.”

U.S. crude oil supplies fell 2.32 million barrels to 357 million last week, the first drop since February, the Energy Department said yesterday in a weekly report. Inventories were forecast to increase by 1.3 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.

Gasoline stockpiles dropped 1.58 million barrels to 208.1 million, the lowest level since the week ended Nov. 12, the report showed. Stockpiles were forecast to decline by 1.75 million barrels, according to the survey.

Middle East Unrest

Oil has advanced 23 percent in New York this year. Unrest in the Middle East and North Africa has toppled leaders in Egypt and Tunisia and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen.

The North Atlantic Treaty Organization and its allies are being drawn more deeply into an intervention that aims to topple Libya’s Muammar Qaddafi. The U.S. announced yesterday it will provide $25 million in aid to Libya’s disorganized and poorly equipped rebels, while Italy, France and the U.K. dispatched military advisers.

Libyan crude output, which averaged 1.6 million barrels a day last year, fell to 390,000 barrels a day in March, according to a Bloomberg News survey. The country has Africa’s biggest proved oil reserves.

The Organization of Petroleum Exporting Countries will cut crude-oil loadings because of a seasonal drop in consumption, according to tanker-tracker Oil Movements. The group will ship 22.67 million barrels a day in the four weeks to May 7, down from 23 million barrels in the period ended April 9, the Halifax, England-based consultant said in a report yesterday.

Oil volume in New York totaled 520,703 contracts yesterday, 34 percent below the average of the past three months. Open interest was 1.55 million contracts.

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