BS: Crude Oil Climbs a Third Day as Supplies Fall, Equities Gain
July 21 (Bloomberg) -- Oil rose for a third day as equities climbed amid speculation the Federal Reserve may take measures to stimulate economic growth and after an industry report showed a decline in U.S. crude inventories.
Oil advanced with U.S. equities as traders speculated Federal Reserve Chairman Ben S. Bernanke may announce a reduction of the interest rate the Fed pays on banks’ excess reserves to stimulate economic growth. Bernanke will give his semiannual report on monetary policy to the Senate Banking Committee today. Crude supplies declined last week, according to the American Petroleum Institute.
“The global economy is doing much better than it had been getting credit for,” said James Cordier, a portfolio manager at OptionSellers.com in Tampa, Florida. “If the stock market holds together, oil has a good chance of trading back to $80 again this month.”
Crude oil for September delivery gained as much as 27 cents, or 0.4 percent, to $77.85 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.70 at 8:36 a.m. Sydney time. Yesterday, the contract added 68 cents, or 0.9 percent, to $77.58. Futures have dropped 2.1 percent since the start of the year.
The contract for August crude oil expired yesterday. It rose 90 cents, or 1.2 percent to $77.44.
Prices also gained after the National Hurricane Center said a weather system over Puerto Rico and the Dominican Republic has a 60 percent chance of becoming a tropical cyclone. It would be the second of the season.
Crude Supplies
The Gulf of Mexico accounts for about 31 percent of U.S. oil output and 10 percent of its natural-gas production and is home to seven of the 10 busiest ports, according to the Energy Department. States along the Gulf are home to 43 percent of operable U.S. refining capacity.
The Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
China overtook the U.S. as the world’s biggest energy user last year, according to the International Energy Agency. China consumed 2,252 million metric tons of oil equivalent in 2009 in the form of oil, coal, natural gas, nuclear power and renewable sources, Fatih Birol, IEA’s chief economist, said July 19. That exceeded the 2,170 million tons used by the U.S.
Brent crude oil for September settlement gained 60 cents, or 0.8 percent, to end the session at $76.22 a barrel on the London-based ICE Futures Europe exchange yesterday.
--Editor: John Viljoen.
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Clyde Russell in Singapore at crussell7@bloomberg.net
