BLBG: Crude Oil Trades Near Three-Week High After Equities Gained
By Christian Schmollinger and Ben Sharples
July 28 (Bloomberg) -- Crude oil was little changed near a three-week high after gains in the stock market raised investor expectations that the global recession may be easing.
Oil traded above $68 a barrel as an index of Asian equities climbed for an 11th day following gains in the Standard & Poor’s 500 Index. The Commerce Department yesterday reported U.S. new- home sales climbed the most in eight years in June, a sign the deepest housing slump since the Great Depression is starting to stabilize.
“You’re seeing support for crude from the bit of better numbers coming out of the U.S. data,” said Akhilesh Kamkolkar, the head of futures at Halifax Investment Services in Sydney. “People are seeing this as more of a stabilization in the market rather than a recovery.”
Crude oil for September delivery traded at $68.60 a barrel, up 22 cents, in after-hours electronic trading on the New York Mercantile Exchange at 2:35 p.m. Singapore time. Yesterday, it rose 33 cents, or 0.5 percent, to settle at $68.38, the highest since July 1. Oil has gained 53 percent this year.
The MSCI Asia Pacific Index rose 0.7 percent to 109.78 as of 1:20 p.m. in Tokyo. An acceleration in China’s economic growth and better-than-expected U.S. earnings have helped drive an 11 percent climb in the past 11 days. That’s the longest winning streak since January 2004.
The S&P 500 added 0.3 percent to 982.18 in New York and the Dow Jones Industrial Average increased 15.27 points, or 0.2 percent, to 9,108.51.
“The surge in equities over the last two weeks has been the prime driver for the move in crude from $58 to $68 over the same time period,” said Mike Sander, an investment adviser with Sander Capital in Seattle.
Crude Supplies
China’s oil consumption will rebound “gradually” in the second half of this year along with an economic recovery, the China Petroleum and Chemical Industry Association said today.
U.S. oil supplies probably fell 1.6 million barrels last week from 342.7 million, according to the median of seven estimates by analysts before an Energy Department report tomorrow. Four of those surveyed said supplies dropped, and three forecast an increase.
Gasoline inventories probably declined 650,000 barrels from 215.4 million, according to the median forecast in the survey.
Gasoline for August delivery rose 0.63 cent, or 0.3 percent, to $1.9410 a gallon on the Nymex at 2:29 p.m. Singapore time. Yesterday, it rose 1.88 cents, or 1 percent, to $1.9347.
U.S. Inventories
Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1 million barrels from 160.5 million. Six out of the seven respondents forecast a gain.
The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington.
“It’s still a sideways market right now,” said Clarence Chu, a trader with crude oil options dealer Hudson Capital Energy in Singapore. “The fundamentals don’t support oil at $70. It looks like we’re heading there but very slowly.”
Brent crude oil for September settlement traded at $71.07 a barrel, up 26 cents, on London’s ICE Futures Europe exchange at 2:36 p.m. Singapore time. Yesterday, it rose 49 cents, or 0.7 percent, to $70.81.
To contact the reporters on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
