BS: Crude Oil Rises the Most in Almost Two Weeks as Dollar Declines
By Margot Habiby and Paul Burkhardt
June 9 (Bloomberg) -- Crude oil rose to the highest level in almost two weeks in New York as the dollar fell against most major currencies, boosting the appeal of commodities as an alternative investment.
Oil jumped as much as 4.1 percent and the dollar retreated as Federal Reserve Chairman Ben S. Bernanke told a congressional panel that the U.S. recovery is being restrained by the housing and commercial real-estate markets. U.S. oil supplies dropped to the lowest level since April in a government report today.
“We’ve had a substantial pullback in the dollar in the past two days,” said Rich Ilczyszyn, a senior market strategist with broker Lind-Waldock in Chicago. “It’s more the currency effect today rather than supply and demand.”
Crude oil for July delivery rose $2.72, or 3.8 percent, to $74.71 a barrel at 11:05 a.m. on the New York Mercantile Exchange. Earlier, prices touched $74.96 in the biggest advance since May 27. Futures have risen 6.7 percent in the past year.
The dollar index, which measures the U.S. currency against six trading partners, fell for a second day, dropping 1 percent to 87.502. A weaker dollar boosts the appeal of commodities as an alternative investment. The dollar also fell before a European Central Bank decision tomorrow about interest rates.
The Standard & Poor’s 500 Index gained 1.2 percent to 1,074.38 as stocks advanced in the U.S. and Europe after Reuters reported a surge in China’s exports. China’s exports in May grew about 50 percent from a year earlier, Reuters said. The Dow Jones Industrial Average gained 92.96 points, or 0.9 percent, to 10,032.94.
Inventories Decline
“There wasn’t anything bullish enough or bearish enough in the report to change the momentum we’re seeing in the marketplace,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The momentum is being driven by the Chinese data.”
Yesterday, oil climbed as much as 3 percent after the American Petroleum Institute reported U.S. inventories slipped 4.54 million barrels last week to 358.2 million, the biggest drop since the week ended Dec. 4.
“The draw is looked upon as a hopeful sign that demand is returning,” said Mike Fitzpatrick, vice president of energy at MF Global in New York.”
Gasoline inventories fell 8,000 barrels to 219 million barrels in the Energy Department report. Stockpiles were estimated to decline by 500,000 barrels in the survey.
Brent crude for July delivery gained $1.94, or 2.7 percent, to $74.24 a barrel on the ICE Futures Europe exchange in London.
--Editors: Joe Link, Richard Stubbe
To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Paul Burkhardt in New York at pburkhardt@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
