BLBG: Crude Oil Rises as Equities Gain, U.S. Retail Sales Increase
By Margot Habiby
April 14 (Bloomberg) -- Crude oil advanced, snapping the longest drop since January, as global equities strengthened and sales at U.S. retailers climbed, signals that energy demand may improve with the economy.
Oil rose more than 1.2 percent as the Standard & Poor’s 500 Index climbed to the highest level since September 2008 on greater-than-estimated profits by Intel Corp. and JPMorgan Chase & Co. U.S. purchases gained 1.6 percent in March, the most in four months, the Commerce Department reported in Washington.
The equity markets and earnings reports are “barometers of economic activity and economic recovery,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy commodities. “As they go, so goes energy demand.”
Crude oil for May delivery rose 27 cents, or 0.3 percent, to $84.32 a barrel at 9:58 a.m. on the New York Mercantile Exchange, ending a five-day decline. Oil has gained 71 percent in the past year.
The S&P 500 rose 0.4 percent to 1,201.84, and the Dow Jones Industrial Average gained 41.72, or 0.4 percent, to 11,061.14 on the earnings, which bolstered confidence that a six-week equities rally was justified. The Stoxx Europe 600 Index added 0.6 percent.
The Commerce Department also revised up retail sales numbers for February and January, and the Labor Department reported that consumer prices rose 0.1 percent last month.
Inflation
“The CPI shows absolutely no inflation whatsoever, which keeps interest rates at zero, and the investor in oil loves that idea of financing his long futures at zero percent interest,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida.
Federal Reserve policy makers last month pledged to keep the benchmark interest rate near zero in coming months to fuel the economy. Fed Chairman Ben S. Bernanke testifies before Congress today.
OPEC cut estimates of demand for its own crude in 2010 as production outside the group accelerated.
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, predicts members will need to produce 28.81 million barrels of crude a day to satisfy demand for the year, according to its monthly oil market report. That’s about 135,000 barrels a day less than last month’s projection. The producer group left its forecast for world oil demand in 2010 little changed.
Inventories
A U.S. government report today is expected to show crude inventories grew for an 11th week, the longest stretch of increases in five years.
The U.S. Energy Department will probably report inventories jumped by 1.3 million barrels, based the median of 17 estimates by analysts surveyed by Bloomberg News.
The industry-funded American Petroleum Institute reported yesterday U.S. crude stockpiles gained 1.41 million barrels last week. It was the seventh straight increase in API oil stockpiles.
Brent crude for May settlement gained 21 cents, or 0.3 percent, to $84.93 on the London-based ICE Futures Europe exchange. That puts Brent’s premium to the New York futures at 61 cents a barrel.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
