Oil rose to a six-month high on signs U.S. crude inventories are dropping and speculation the dollar will decline following Federal Reserve economic stimulus measures, boosting the appeal of commodities. The Fed today may announce a plan to purchase at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News. This policy, known as quantitative easing, may weaken the dollar and increase investors’ interest in oil. U.S. crude stockpiles dropped 4.1 million barrels, the most since July, in the week ended Oct. 29, the industry-backed American Petroleum Institute said yesterday. “The news tonight from the Fed on the quantitative easing will be the big thing for the oil market,” said Serene Lim, an energy and commodity strategist at Australia and New Zealand Banking Group Ltd. in Singapore. “Everyone is a bit cautious ahead of the report. The inventory levels being drawn down are seen as a positive.” Oil for December delivery rose for a third day, gaining as much as 60 cents, or 0.7 percent, to $84.50 on the New York Mercantile Exchange, the highest since May 4. It was at $84.23 at 12:31 p.m. in Singapore. Oil closed at $83.90 yesterday and has risen 6.1 percent the past year. The greenback has dropped 9.1 percent versus the euro since Aug. 27, when Fed Chairman Ben S. Bernanke said in a speech that the central bank “will do all that it can” to sustain economic growth, fueling speculation that a resumption of quantitative easing would debase the dollar. The U.S. currency declined against most its major counterparts yesterday, falling 1 percent to $1.4034 per euro in New York. It traded at $1.4011 per euro at 12:32 p.m. Singapore time. Stockpiles Fall Brent crude for December settlement gained as much as 47 cents, or 0.6 percent, to $85.88 a barrel on the London-based ICE Futures Europe exchange today. The contract rose 79 cents, or 0.9 percent, to $85.41 a barrel yesterday, the highest level since May 4. U.S. crude stockpiles fell 1.1 percent last week to 367.6 million barrels, the API said. Gasoline supplies slumped 3.2 million barrels to 219.7 million and distillate inventories dropped 4.7 million to 161.4 million, the group said. A government report is forecast to show that U.S. supplies of distillate fuel, including diesel and heating oil, are at their lowest level since July. Inventories probably declined 1 million barrels last week, according to the median of 17 analyst responses in a Bloomberg News survey before today’s Energy Department report. All those surveyed said supplies would fall. U.S. crude stockpiles probably increased 1.5 million barrels, the survey showed. They rose 5.01 million barrels to 366.2 million in the week ended Oct. 22, the highest level since July and 13 percent above the five-year average. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; James Paton in Sydney at jpaton4@bloomberg.net. To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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