SF: Crude Oil Rises on Forecasts That U.S. Recovery Is Under Way
June 14 (Bloomberg) -- Crude oil advanced in New York to trade above $75 on speculation growth in the U.S. economy will boost fuel demand from the world's biggest energy consumer.
Oil climbed for the fourth time in five days as European equity indexes advanced before reports this week that may show U.S. factories churned out more goods last month and the cost of living declined. These may point to a manufacturing-led recovery without inflation, according to a Bloomberg News survey of economists. The dollar dropped to its lowest level against the euro in more than a week, bolstering the appeal of commodities.
"The market is moving on the usual suspects," said Eugen Weinberg, head of commodity research at Commerzbank AG in Frankfurt. "It's a sentiment-driven rally based on a weaker dollar, stronger equities, and bargain-hunting by investors."
Crude oil for July delivery rose as much as $1.92, or 2.6 percent, to $75.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $75.45 at 12:51 p.m. London time. Brent crude oil for July delivery rose $1.47 to $75.82 on the London-based ICE Futures Europe exchange.
Production at U.S. factories, mines and utilities increased in May for the 10th time in 11 months, according to the median estimate from 63 economists polled by Bloomberg News before Federal Reserve figures due June 16. Consumer prices probably declined 0.2 percent in May, after slipping 0.1 percent the previous month, the survey showed.
"Fundamentals are getting better and the euro is also driving the crude market," said Ken Hasegawa, a commodity derivative sales manager at Newedge in Tokyo. "On the downside, the market is well-supported above $73 at the moment."
Weaker Dollar
The dollar declined against the euro for the fourth time in five days. The single European currency gained as much as 1.2 percent to $1.2259, the highest since June 3, after a report showed industrial output in the 16 nations using the euro rose more than economists forecast in April. The Stoxx Europe 600 Index gained 0.9 percent to 251.73 as of 12:43 p.m. in London.
Oil fell 2.3 percent on June 11 after the Commerce Department said U.S. retail sales decreased 1.2 percent in May, the biggest drop since September.
Concerns about the viability of the U.S. economic rebound have led hedge funds to cut their bets on higher oil-futures prices to a 10-month low.
Speculative net-long positions, or wagers that prices will increase, in crude futures declined 30 percent to 17,457 contracts on the New York Mercantile Exchange in the week ended June 8, the lowest level since July, according to the Commodity Futures Trading Commission's Commitments of Traders Report released on June 11. Bets on gains have dropped 87 percent since reaching a record 135,669 in January.
--With reporting by Christian Schmollinger in Singapore. Editors: John Buckley, Raj Rajendran
