BLBG: Oil Rises for First Time in a Week as Dollar Stimulates Buying
July 7 (Bloomberg) -- Crude oil rose for the first day in a week as the U.S. dollar declined against the euro, spurring demand for the commodity as a hedge against inflation.
The U.S. Energy Department will probably say crude inventories fell and gasoline stockpiles grew last week, according to a Bloomberg survey before the department’s weekly report tomorrow. Morgan Stanley said oil prices may average $65 next year, compared with a projection of $48 for this year, as government spending stimulates demand.
“A weaker U.S. dollar and firmer equity markets are lending temporary support to crude oil prices,” said Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich. “But with demand still weak, the correction could continue, especially if inventory data is bearish tomorrow.”
Oil for August delivery rose as much as 70 cents, or 1.1 percent, to $64.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $64.48 a barrel at 11 a.m. London time. Yesterday, it fell to $64.05, the lowest settlement since May 27.
Brent crude for August rose as much as 81 cents, or 1.3 percent, to $64.86 a barrel on London’s ICE Futures Europe exchange. It was at $64.56 a barrel at 11:01 a.m. local time.
The Energy Department is scheduled to release its Weekly Petroleum Status Report tomorrow at 10:30 a.m. in Washington and will put out its Short-Term Energy Outlook monthly report today.
U.S. gasoline inventories probably rose 1 million barrels last week from 211.2 million, indicating consumption during the country’s peak driving season remained lackluster, a Bloomberg News survey showed.
OPEC Reports
Crude supplies in the U.S. fell 2.9 million barrels in the week ended July 3 from 350.2 million a week earlier, based on the median of 12 estimates by analysts before tomorrow’s report. Supplies of distillate fuel, which includes heating oil and diesel, probably rose 1.83 million barrels from 155 million.
The Merrill Lynch Argentina unit of Bank of America Corp. raised its 2009 average forecast for New York-traded crude to $58.50 a barrel from $52, to reflect an improving economy.
A weaker dollar bolsters the attraction of raw materials such as oil and gold to investors. The dollar was at $1.3964 a euro at 10:05 a.m. in London, compared with $1.3904 earlier.
The Organization of Petroleum Exporting Countries releases its annual oil market outlook and yearly energy statistics tomorrow afternoon, and the Paris-based International Energy Agency will issue its monthly report on world oil demand and supply on July 10.
