By Yee Kai Pin May 27 (Bloomberg) -- Crude oil rose for a second day in New York as the dollar snapped a three-day rally against the euro, bolstering the investment appeal of commodities. Oil jumped 4 percent yesterday, the most since September, after a Commerce Department report showed U.S. durable goods orders gained in April. The increase in orders was the fourth in five months, signaling manufacturing growth in the world’s biggest economy. Futures fell as much as 1.2 percent earlier today on concern rising U.S. crude oil stockpiles indicated slowing demand from the largest energy consumer. “The U.S. economy is looking good but still we have to watch carefully the situation in Europe,” Ken Hasegawa, a commodity-derivative sales manager at broker Newedge, said in Tokyo. “It’s possible for crude oil prices to go down again below $70.” Crude oil for July delivery rose as much as 49 cents, or 0.7 percent, to $72 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $71.84 at 1:18 p.m. Singapore time, after dropping to as low as $70.67. Futures are up 13 percent in the past year. The dollar was at $1.2279 per euro at 12:55 p.m. in Singapore, from $1.2178 yesterday in New York. Oil has fallen 18 percent since reached $87.15 a barrel on May 3 as Europe’s debt crisis raised concern over growth and the future of the region’s single currency. “There is a wave of risk aversion that has flooded the market, stemming from Europe’s problems,” said Toby Hassall, a commodities analyst at CWA Global Markets Pty in Sydney. Oil Supply Commercially held U.S. crude oil inventories climbed for the 16th time in 17 weeks, gaining 2.5 million barrels to 365.1 million in the week ended May 21, an Energy Department report yesterday showed. Stockpiles were forecast to rise 250,000 barrels, based on a Bloomberg News survey of analysts. Refiners cut processing rates for a third week even as imports increased. “U.S. inventories of crude and products are very high and that’s putting pressure on prices,” said Hasegawa at Newedge. “It’s not easy to take a long position at this moment.” Fuel demand increased 0.6 percent to 19.7 million barrels a day last week, according to the department. Gasoline stockpiles fell 203,000 barrels to 221.6 million, the lowest in six weeks. Distillate fuel inventories, which include heating oil and diesel, dropped 267,000 barrels to 152.5 million, 23.4 percent above the five-year average level. Cushing Inventories Crude oil stockpiles at Cushing, Oklahoma, where New York- traded West Texas Intermediate oil is delivered, declined for the first time in 10 weeks, the department said. Stockpiles were at 37.6 million barrels, after reaching a record high in the previous three weeks, based on government data collected at the storage hub since 2004. The discount of front-month New York oil futures to forward months narrowed, reflecting the supply drop at Cushing. July crude traded at $3.65 a barrel below December, Bloomberg data showed. This contango was $9.88 two weeks ago, encouraging investors to hoard supplies for future sales. Brent crude oil for July settlement rose as much as 38 cents, or 0.5 percent, to $72.12 a barrel on the London-based ICE Futures Europe exchange. It was at $71.92 at 1:19 p.m. Singapore time. Yesterday, the contract increased for the first time in 10 days, gaining $2.19, or 3.2 percent, to $71.74. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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