By Grant Smith April 29 (Bloomberg) -- Crude oil rose for a second day in New York as equities rallied and a report showed U.S. refinery activity surged to its highest level in almost two years. Oil gained 1 percent yesterday as the Federal Open Market Committee said economic conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Gasoline supplies fell 1.24 million barrels last week, a report from the Energy Department showed. They were forecast to increase, according to a Bloomberg News survey. “The big jump in refinery utilization signals that the overhang may be refined away,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “A couple more weeks of rising refinery rates and we could see inventories come down.” Crude oil for June delivery rose as much as $1.23, or 1.5 percent, to $84.45 a barrel in electronic trading on the New York Mercantile Exchange and traded at $84.41 at 11:05 a.m. London time. Brent crude for June settlement was up $1.15 at $87.31 a barrel on the London-based ICE Futures Europe exchange. Brent’s premium to New York futures is now $2.90 a barrel and reached $3.34 on April 27, the highest since Aug. 17. The Stoxx Europe 600 Index was up 1 percent at 260.73. The dollar weakened to $1.3273 against the euro, compared with $1.3221 yesterday, increasing the appeal of commodities. “The Fed seemed to re-emphasize the strength in the U.S. economy, the commentary really focusing more on the positives of the recovery, and that’s probably had an impact,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The EIA data was positive in the sense that gasoline stocks fell unexpectedly.” Driving Season Refineries operated at 89 percent of capacity, up 3 percentage points from the prior week, and the highest level since July 2008, the Energy Department report showed. Gasoline consumption in the U.S. peaks during the so-called summer driving season, which lasts from the Memorial Day weekend in late May to Labor Day in early September. U.S. inventories of crude oil rose 1.96 million barrels to 357.8 million last week, the highest level since June, the report showed. Stockpiles were forecast to climb 1 million barrels, according to a Bloomberg News survey. Imports increased 0.7 percent to 9.68 million barrels a day, the most since September. Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 2.94 million barrels to 151.8 million last week. A 1.5 million-barrel gain was estimated in the survey. ‘Situation Getting Worse’ “The builds in crude and distillates mean that the fundamental situation is getting worse in the U.S.,” National Australia Bank’s Westmore said. “Overall, I don’t think this is a positive weekly read for the fundamentals.” Saudi Arabian Oil Minister Ali al-Naimi said crude oil prices are at “sustainable levels” as the global economy recovers from the worst slump since the 1930s. He said the world economy is entering into a “new growth trajectory.” Stockpiles at Cushing, Oklahoma, the delivery point for New York traded futures, climbed 1.3 percent to 34.6 million barrels, the highest since the week ended Jan. 1. This build has continued to put pressure on the West Texas price versus Brent futures, analysts from Societe Generale said in a research note yesterday. To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net

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