By Grant Smith and Yee Kai Pin July 15 (Bloomberg) -- Crude oil rose for the first day in four before a report forecast to show that U.S. crude-oil inventories contracted for a fifth week. Oil climbed from an eight-week low as equity markets in Asia and Europe advanced, raising optimism about an economic rebound. The U.S. Energy Department will probably say crude supplies fell 2.1 million barrels last week, according to a Bloomberg survey. Yesterday, the industry-funded American Petroleum Institute said gasoline inventories fell for the first time in six weeks. “People are pricing in a positive result from this afternoon’s data after the API,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “We also have the combination of equities being higher today, and the dollar weaker.” Crude oil for August delivery gained as much as $1.17, or 2 percent, to $60.69 a barrel on the New York Mercantile Exchange. The contract traded at $60.44 at 1:09 a.m. London time. Yesterday, it declined to $59.52, the lowest settlement since May 18. Nigeria’s main rebel group, the Movement for the Emancipation of the Niger Delta, declared a 60-day cease-fire in its local campaign targeting oil and gas installations after authorities freed leader Henry Okah. The cease-fire came into force at midnight local time. The MSCI World Index climbed 0.9 percent at 12:23 p.m. in London, its third day of gains. Futures on the Standard & Poor’s 500 Index increased 1 percent. Demand Growth “We are starting to see index-fund buying on the loose connection between higher equities and an assumption that oil demand will grow,” Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut, said in a note to clients. A report today from the Energy Department may show that crude supplies fell 2.1 million barrels in the week ended July 10 from 347.3 million the previous week, according to the median of 14 estimates by analysts. The report will probably show gasoline inventories rose 875,000 barrels in the week ended July 10. The department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. in Washington. “The expectation is that U.S. gasoline demand has been weak post-July 4,” said Victor Shum, a senior principal at consultant Purvin & Gertz Inc. in Singapore. “Traders would treat the API report with some caution.” Distillate Stocks Stocks of distillate fuel, a category that includes diesel and heating oil, probably rose 2 million barrels last week, the survey showed. Distillate fuel inventories increased 3.74 million barrels to 158.7 million in the week ended July 3, the highest since January 1985, according to the department. Yesterday, the API said that crude inventories fell 1.6 million barrels to 346.8 million last week. The API collects stockpile data on a voluntary basis from operators of refineries, bulk terminals and pipelines. Brent crude for August settlement rose as much as $1.26, or 2.1 percent, to $62.12 on London’s ICE Futures Europe Exchange, and traded at $62.05 at 1:10 p.m. London time. The contract expires tomorrow. To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net

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