Oil rose for a fourth day in New York as investors bet that signs of a strengthening U.S. economy and the return of refinery operations after Hurricane Irene indicate fuel demand will increase. West Texas Intermediate, the main grade traded in New York, gained as much as 0.5 percent after a Commerce Department report yesterday showed consumer spending climbed more than forecast in July. Energy Department data tomorrow may say gasoline supplies dropped as crude stockpiles increased last week, according to a Bloomberg News survey. Prices also rose as refineries returned to normal rates after Irene passed. “With the improvement in consumer spending in the U.S., one would perhaps think that there may be a glimmer of hope in confidence returning,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicts crude in New York will average $115 a barrel this year. “We would probably see gasoline usage start to improve. All avenues still point to the price of West Texas and Brent probably moving higher.” Crude for October delivery rose as much as 45 cents to $87.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.41 at 2:40 p.m. Sydney time. The contract yesterday climbed $1.90, or 2.2 percent, to $87.27. Prices have gained 17 percent the past year. Brent oil for October settlement gained 26 cents, or 0.2 percent, to $112.14 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $24.71 to U.S. West Texas Intermediate futures, compared with a record close of $26.21 on Aug. 19. Oil Stockpiles The Energy Department report will probably show gasoline stockpiles fell 900,000 barrels last week, according to the median of eight analyst estimates in a Bloomberg survey. Distillate-fuel inventories, a category that includes heating oil and diesel, probably increased 900,000 barrels. Crude-oil inventories may have climbed by 875,000 barrels as refineries cut operating rates in preparation for Hurricane Irene and the government released barrels from the Strategic Petroleum Reserve, the survey showed. The release of emergency stockpiles is almost complete. The department delivered 25.58 million barrels of oil from July 17 to Aug. 28, according to a statement on its website. The supplies are part of a 30.64 million-barrel sale to companies in cooperation with the Paris-based International Energy Agency, which sought to counter lost Libyan output from the conflict between rebels and the regime of Muammar Qaddafi. Consumer Spending The Commerce Department report showed U.S. consumer spending in July climbed 0.8 percent, the biggest gain since February. The median estimate of 74 economists surveyed by Bloomberg News was for a 0.5 percent increase. “Oil prices were up solidly overnight, buoyed by the better than expected U.S. consumer spending data,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, said in a note today. The bank estimates New York oil will average $100 a barrel in the third quarter. PBF Energy Partners LP returned its Paulsboro, New Jersey and Delaware City, Delaware refineries to normal rates, according to an Energy Department website. ConocoPhillips may attempt to start an alkylation unit at its 238,000 barrel-a-day Bayway plant in New Jersey today after shutting the refinery because of Irene, according to a person familiar with the plant’s operations. Buckeye Pipeline Buckeye Partners LP said operations on its pipelines to Auburn and Brooklyn, New York, resumed and deliveries to Buffalo, New York, are scheduled to start today. Deliveries to John F. Kennedy and LaGuardia airports in New York City from storage in Linden, New Jersey, will begin as inventory levels allow, the Houston-based company said in a bulletin to shippers yesterday. The CME Group Inc. declared a force majeure for heating oil shipments into New York for August because of Hurricane Irene, the company said in a statement yesterday. The legal clause allows companies to miss scheduled shipments because circumstances beyond their control. Heating oil futures climbed 79 cents, or 0.3 percent, to $3.0181 a gallon. Hedge funds and other money managers cut bullish bets on Brent crude by 12 percent in the week ended Aug. 23, according to data from ICE Futures Europe. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 43,489 contracts, the London-based exchange said yesterday in its weekly Commitment of Traders report. Net-long positions fell by 6,119 contracts from 49,608 a week earlier. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Paul Gordon in Hong Kong at pgordon6@bloomberg.net

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