BLBG: Oil Rises From Five-Week Low as Equities Gain, Dollar Declines
By Mark Shenk
Aug. 17 (Bloomberg) -- Crude oil rose from a five-week low as advancing equity markets bolstered confidence that the economic recovery can be sustained, increasing fuel demand.
Oil gained as much as 1.5 percent after European stocks and U.S. index futures advanced as earnings beat analysts’ estimates and Potash Corp. of Saskatchewan Inc. rejected a takeover bid. The dollar slipped to $1.2882 per euro, down 0.4 percent from yesterday, boosting the appeal of commodities.
“We’ve got higher equities and a lower dollar supporting the market,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “Rising equities are a sign the economy could be expanding, leading to increased demand. The fall of the dollar makes dollar-denominated crude cheaper for many buyers.”
Crude oil for September delivery rose 63 cents, or 0.8 percent, to $75.87 a barrel at 9:03 a.m. on the New York Mercantile Exchange. Yesterday, futures slipped 15 cents to settle at $75.24, the lowest closing price since July 12.
Brent crude oil for October settlement climbed 90 cents, or 1.2 percent, to $76.53 a barrel on the London-based ICE Futures Europe Exchange.
“The dollar is pretty weak and I think that’s what’s guiding the market,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. “Oil at $75 is seen by a lot of people as fair value. There’s not a lot of momentum in either direction.”
An Energy Department report tomorrow will probably show that U.S. crude oil inventories fell 1 million barrels last week, according to the median of 15 analyst responses in a Bloomberg News survey.
The department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute publishes its report on inventories today. The API collects stockpile data on a voluntary basis from operators of refineries, bulk terminals and pipelines.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
