Crude oil rose for a second day in New York on optimism that China’s expanding economy will fuel demand growth, and as the dollar weakened against the euro, increasing the investment appeal of commodities. Oil gained as China’s stocks advanced for a second day as rising domestic consumption boosted the earnings of automakers. U.S crude inventories probably dropped in the seven days ended July 16, the fourth consecutive week of declines, a Bloomberg News survey showed before a Department of Energy report tomorrow. “The dollar’s down a little bit, the market’s also pretty encouraged by the recent run of fairly bullish DOE reports,” said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “China’s upside really is its restocking ability and its underlying economic growth, I can’t see too much weakness in that market.” Crude oil for August delivery gained as much as 37 cents, or 0.5 percent, to $76.91 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.72 at 12:52 p.m. Singapore time. Yesterday, it rose 53 cents, or 0.7 percent, to $76.54. The August contract expires today. The more-active September contract increased 10 cents, or 0.1 percent, to $77 a barrel. Futures have declined 3.4 percent this year. The dollar was at $1.2968 per euro at 12:54 p.m. Singapore time from 1.2942 in New York yesterday. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 27.48, or 1.1 percent, to 2,502.89 as of 10:56 a.m. local time, set for the highest since June 28. U.S Inventories U.S. crude oil supplies probably fell 1 million barrels last week, according to the median of nine analyst estimates surveyed by Bloomberg News before an Energy Department report. Gasoline inventories probably increased 1 million barrels. Refineries probably operated at 90.15 percent of capacity last week, down 0.35 percentage point from the previous week, according to the Bloomberg News survey. Utilization rates in the week ended July 9 were at the highest level since January 2008. “Oil is certainly looking more bullish than bearish,” said Peter McGuire, managing director of CWA Global Markets Pty in Sydney. “We still think it has upward traction from here. Traditionally, there is more demand this time of the year.” Price gained after the Dow Jones Industrial Average advanced 0.6 percent and Halliburton Co.’s profit beat estimates. Crude “The price of oil received a bit of a boost from a small rally in the Dow Jones,” said Mike Sander, an investment adviser at Sander Capital Advisors in Seattle. China China overtook the U.S. as the world’s biggest energy user last year, suggesting continued strength in global fuel-demand growth, according to the International Energy Agency. It consumed 2,252 million metric tons of oil equivalent in 2009 in the form of oil, coal, natural gas, nuclear power and renewable sources, IEA Chief Economist Fatih Birol said yesterday. That exceeded the 2,170 million tons used by the U.S. “Most of the catch-up to the U.S. is in coal demand,” said ANZ’s Pervan. “But oil imports are still strong. China will continue to build strategic reserves of oil, which will be an ongoing process in the next three to four years.” Brent crude oil for September settlement gained as much as 34 cents, or 0.5 percent, to $75.96 a barrel on the London-based ICE Futures Europe exchange, and was at $75.70 at 12:51 p.m. Singapore time. It climbed 0.3 percent to $75.62 yesterday. Dalian Pipeline A pipeline explosion at a port in northeastern China that led to an oil spill covering more than 60 square kilometers (23 square miles) was caused after a “catalyst” was added to a crude-oil storage tank, the government said. The error was made when an oil tanker was unloading at Dalian port on July 16, according to statement on the Ministry of Transport’s website, which didn’t say what the substance was or who was responsible for the incident. To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net

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