Crude oil rose on optimism that the worst of the global economic recession may be over, improving the outlook for fuel demand. U.S. Treasury Secretary Timothy Geithner said in an interview yesterday that there are “encouraging signs” of a recovery in financial markets. U.S. stocks advanced for a second day after a report yesterday that sales of existing homes unexpectedly increased and the Institute of Supply Management said new orders for manufactured goods gained in February. “Some of the data out of the U.S. yesterday was very encouraging, especially the new orders component of the ISM,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “The commodities markets are looking to equities markets for some barometer of where the economy is heading and therefore, oil demand.” Crude oil for May delivery rose as much as 83 cents, or 1.7 percent, to $49.22 a barrel in electronic trading on the New York Mercantile Exchange. It was at $49.17 a barrel at 12:20 p.m. in Singapore. Yesterday, futures fell $1.27, or 2.6 percent, to $48.39, the lowest settlement since March 18. Oil is up 10 percent this year and has dropped 67 percent from a record $147.27 a barrel in July. The Group of 20 summit convenes today in London as some reports suggest the pace of decline is easing. U.S. durable- goods orders and home sales rose in February, Chinese urban investment surged 26.5 percent in the first two months of the year, and German investor confidence in March reached its highest level since July 2007. Inventories Rise “You’re seeing encouraging signs of improvement in our markets,” Geithner said yesterday in a Bloomberg Television interview in London, where he is attending the meeting with President Barack Obama. Still, other data is showing that global inventories are rising as fuel demand falters because of the recession. U.S. crude-oil inventories climbed 2.84 million barrels in the week ended March 27 to the highest since July 1993, the Energy Department said. Gasoline supplies unexpectedly rose by 2.23 million barrels to 216.8 million barrels. Refineries operated at 81.7 percent of capacity, down 0.3 percentage point from the week before. A gain of 0.3 percentage point was forecast. “We’re seeing a lot of builds because now the refiners are shutting down to switch between products,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “But even without these pre-season shutdowns, demand for oil is lower than in previous years.” OPEC Cuts Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the report showed. It was the lowest consumption for a four-week period since October. The Organization of Petroleum Exporting Countries, the International Energy Agency and the Energy Department reduced their 2009 forecasts for oil demand in March because of the recession. They expect consumption to slump by more than 1 million barrels a day this year. OPEC cut oil output by 1.2 percent to an average 27.395 million barrels a day last month, according to a Bloomberg News survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.06 million barrels a day, 215,000 more than their target of 24.845 million. “OPEC has definitely restored their credibility with these cuts,” said Hudson Capital’s Chu. “This really shows that they mean business so that if they decide to cut again in May, it could push the market higher.” OPEC, in a meeting March 15 in Vienna, decided against cutting production targets further because of concern higher prices might harm an ailing global economy. Ministers pledged to tighten compliance with their quotas after crude oil fell more than $100 a barrel from the July record. Brent crude oil for May settlement rose as much as 76 cents, or 1.6 percent, to $49.20 a barrel on London’s ICE Futures Europe exchange at 12:20 p.m. Singapore time. The contract fell 79 cents, or 1.6 percent, to end the session at $48.44 a barrel yesterday.

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