Oil rose from a five-week low in New York as speculation that the Federal Reserve may start another stimulus program countered signs of a slowing economy in the world’s biggest crude-consuming nation. Futures climbed as much as 0.7 percent for the first gain in five days. Three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth, the Wall Street Journal reported. Oil slid yesterday after reports showed U.S. service industries expanded in July at the slowest pace in 17 months and crude stockpiles climbed a second week. Reports of stimulus “may give a short-term reprieve to prices and forecast demand but if these weak numbers keep coming out it’s going to swamp any positive sentiment around further quantitative easing,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts crude will average $98 a barrel in the third quarter. Crude for September delivery gained as much as 66 cents to $92.59 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.35 at 11:35 a.m. Sydney time. The contract yesterday dropped $1.86 to $91.93, the lowest since June 27. Prices are 12 percent higher the past year. Brent oil for September settlement rose 7 cents, or 0.1 percent, to $113.51 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a $21.16 premium to U.S. futures, compared with a record close of $22.67 on Aug. 2. Crude Stockpiles U.S. crude inventories last week rose 950,000 barrels to 354.9 million, an Energy Department report showed. Gasoline stockpiles climbed 1.7 million barrels to 215.2 million, the highest level since April 1. They were forecast to increase 250,000 barrels, according to a Bloomberg News survey. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, dropped to 52.7 from 53.3 in June. Economists projected 53.5 for July, according to the median forecast in a Bloomberg News survey. Readings above 50 signal expansion. A Labor Department report today may show initial U.S. jobless claims climbed last week. A report tomorrow may show payrolls increased by 85,000 workers in July after an 18,000 increase in June that was the smallest this year, according to the median forecast of 86 economists surveyed by Bloomberg News. Tropical Storm Emily may threaten the U.S. East Coast this weekend after crossing the mountains of Haiti and the Dominican Republic, according to a National Hurricane Center analysis posted shortly before 8 p.m. New York time. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

Source