Aug. 7 (Bloomberg) -- Oil rose to the highest level in more than two months, advancing with equities on optimism that economic growth will accelerate and as tension increased in the Middle East.
Futures climbed 1.6 percent as the Standard & Poor’s 500 Index reached a three-month high, led by commodity and industrial shares, on speculation that central banks will boost efforts to lift growth. Rebels in Syria said Prime Minister Riad Hijab defected in the highest-ranking departure since an uprising began last year.
“The oil market is getting strength from the financial side,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Equities are up and the dollar is down. We’re also getting support from increasing geopolitical risk in the Middle East.”
Crude oil for September delivery increased $1.47 to $93.67 on the New York Mercantile Exchange, the highest settlement since May 15. Prices are up 6.4 percent this month.
Prices were little changed from the settlement after the industry-funded American Petroleum Institute reported oil inventories dropped 5.35 million barrels last week to 364.3 million. The September contract was up $1.38 at $93.58 at 4:34 p.m. in electronic trading.
Brent oil for September settlement climbed $2.45, or 2.2 percent, to end the session at $112 on the London-based ICE Futures Europe exchange. It was the highest close since May 15. The European benchmark’s premium to West Texas Intermediate, the grade traded in New York, rose to $18.33 from $17.35 yesterday.
Equities and commodities gained as Federal Reserve Bank of Boston President Eric Rosengren said on CNBC that the central bank should pursue an “open-ended” easing program of “substantial magnitude” to boost growth and hiring. German Chancellor Angela Merkel backed a bond-buying plan announced by the European Central Bank, a spokesman said yesterday.
“There are expectations that the Europeans will take additional steps to deal with the crisis and of further monetary easing here,” said Mike Wittner, head of oil market research at Societe Generale SA in New York. “Sentiment is improving.”
The Standard & Poor’s 500 Index rose 0.5 percent. The S&P GSCI Index of 24 raw materials climbed 1.1 percent.
Hijab’s defection marked the highest-ranking departure since the uprising against Assad began last year. It was the most serious blow to the Syrian authorities since last month, when a bomb attack in Damascus killed key members of the military establishment. Government troops clashed with rebels today in and near Damascus, Aleppo, Homs, Daraa and other areas, the Syrian Arab News Agency reported.
The Middle East was responsible for 33 percent of global oil production last year and held 79 percent of proved reserves, according to BP Plc’s Statistical Review of World Energy released in June.
Oil also rose as the U.S. Energy Department raised its crude-oil projection for 2012 to $93.90 a barrel from $92.83 last month in the monthly Short-Term Energy Outlook released today. The department cited expectations of economic stimulus and supply disruption in the Middle East as reason for the rise in prices over the last month.
A department report tomorrow will probably show that U.S. crude stockpiles dropped 1.55 million barrels last week, according to the median of 10 analyst estimates in a Bloomberg survey. Oil inventories plummeted 6.52 million barrels in the week ended July 27, the biggest slide since December.
“Last week’s inventory drop helped push prices higher,” said Stephen Schork, president of The Schork Group Inc. in Villanova, Pennsylvania. “It’s important to keep in mind that inventories remain very high.”
Gasoline supplies are projected to decrease 1.75 million barrels in tomorrow’s report and stockpiles of distillate fuel, a category that includes diesel and heating oil are forecast to rise 250,000 barrels, the survey showed.
Chevron Corp. said it shut a crude unit after a fire at its 240,000-barrel-a-day Richmond, California, refinery.
Crude also rose as loading programs obtained by Bloomberg showed that exports in September of the crudes that make up the Dated Brent benchmark will be 7 percent less than this month, Exports will be 720,000 barrels a day versus 774,194 barrels this month, according to the plans.
“The very lean North Sea loading programs are having a major impact on prices,” Wittner said. “Although we’ve known for a while about the cutbacks, it appears that the loss of the North Sea barrels hasn’t been fully priced in.”
Electronic trading volume on the Nymex was 568,474 contracts as of 4:31 p.m. in New York. Volume totaled 419,723 contracts yesterday, 25 percent below the three-month average. Open interest was 1.43 million.
To contact the reporter on this story: Mark Shenk in New York at email@example.com
To contact the editor responsible for this story: Dan Stets at firstname.lastname@example.org