Oct. 6 (Bloomberg) -- Crude traded near a five-month high after U.S. service companies expanded faster than forecast and an industry report showed gasoline inventories in the world’s biggest oil consumer declined the most since May 2009. Futures rose 1.7 percent yesterday after the Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90 percent of the U.S. economy, climbed to 53.2 from 51.5 in August. Economists surveyed by Bloomberg News projected the index would advance to 52. Prices also gained amid speculation central banks will keep stoking economic growth and as the dollar fell against the euro. “The market is running on the back of optimism,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Optimism on what intervention the U.S. and Japan will take in terms of quantitative easing, which will support oil. The non-manufacturing data was also supportive.” Crude for November delivery was at $82.86 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 1:30 p.m. Singapore time. Yesterday, the contract jumped $1.35 to $82.82, the highest settlement since May 3. Prices, up 4 percent this year, have advanced 12 percent since Sept. 21. U.S. gasoline inventories fell 4.06 million barrels last week, the biggest weekly drop since May 2009, the industry- funded American Petroleum Institute said yesterday. An Energy Department report today may show stockpiles slipped 250,000 barrels, according to a Bloomberg News survey. Oil ‘Overheating’ “With extreme weakness in the dollar, investors are pushing back up the price of stocks and commodities,” Mike Sander, an investment adviser at Sander Capital Advisors in Seattle, said in an e-mailed note. “ With a rise from $74 to $83 over a very short time span, it could be overheating. If oil doesn’t trade through the $83 range, it could face resistance and fall back.” U.S. crude stockpiles climbed by 4.44 million barrels last week, the biggest gain in five weeks, the American Petroleum Institute said. Today’s Energy Department report may show inventories rose by 413,000 barrels, based on the survey. The API 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. Brent crude for November settlement traded at $84.86 a barrel, up 2 cents, on the London-based ICE Futures Europe exchange. Yesterday, the contract surged $1.56, or 1.9 percent, to $84.84, the highest settlement since May 4. Interest Rates Japan’s central bank said yesterday it would keep its benchmark interest rate at “virtually zero.” Federal Reserve Bank Chairman Ben S. Bernanke said on Oct. 4 a first round of asset purchases in the U.S. improved the economy and further buying is likely. Bernanke and other officials have signaled over the past two weeks that the Fed may purchase more Treasuries at its next policy meeting Nov. 2 to Nov. 3 to boost economic growth and reduce unemployment. The dollar was at $1.3846 to the 16-nation euro after declining 1.1 percent to $1.3839 yesterday in New York. A weaker U.S. currency bolsters the appeal of commodities as an alternative investment. U.S. equities climbed yesterday, sending the Standard & Poor’s 500 Index to the highest level since May. The S&P 500 rallied 2.1 percent, the most since Sept. 24, to 1,160.75 at the 4 p.m. close in New York. --Editors: John Viljoen, Ryan Woo. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Clyde Russell in Singapore at crussell7@bloomberg.net.

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