Oil Rises to Three-Week High as U.S. Growth Erodes Inventories

Oil surged to a three-week high in New York on signs that the U.S. economic recovery is whittling down crude inventories in the world’s largest user of the commodity.

Futures climbed as much as 2.1 percent in New York after reports showed that U.S. companies added 157,000 workers in June and applications for unemployment benefits declined last week. The American Petroleum Institute said yesterday that crude inventories dropped 3.2 million barrels last week. An Energy Department report due today is also forecast by analysts to show a drop. Morgan Stanley said it is bullish on oil in the second half of 2011 as production capacity falls.