Oil advanced for a second day in New York on speculation that the Federal Reserve will take further steps to stimulate the economy and as fighting continued in the Libyan capital, Tripoli. Futures climbed as much as 1.9 percent as the U.S. currency weakened, heightening the appeal of using commodities to protect against inflation. Stocks and U.S. equity-index futures jumped. Goldman Sachs Group Inc. (GS) said Libya’s oil production will recover more quickly than forecast after the “sudden takeover” of fields and export facilities by rebels. A U.S. government report tomorrow that may show U.S. gasoline inventories shrank last week while crude stockpiles rose. “What’s really behind prices is the hope of a third round of quantitative easing,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, who forecasts Brent will average $100 a barrel in the fourth quarter. “But at some point the market will need to adjust to reality. Given the probability of recession, Brent at $109 doesn’t feel right.” Crude for October delivery climbed as much as $1.64 to $86.06 a barrel in electronic trading on the New York Mercantile Exchange, and was at $85.76 at 9:16 a.m. London time. The contract earlier fell as much as 0.4 percent. It gained 2.4 percent yesterday. Brent oil for October settlement was at $108.74 a barrel, up 38 cents, on the London-based ICE Futures Europe exchange, after closing 0.2 percent lower yesterday. The European benchmark contract was at a premium of $22.98 to U.S. West Texas Intermediate crude futures, compared with a record settlement of $26.21 on Aug. 19. Fed Measures Asian and European stocks rose on speculation Federal Reserve Chairman Ben S. Bernanke will signal additional measures to stimulate the economy. Bernanke is scheduled to speak Aug. 26 in Jackson Hole, Wyoming, at an annual conference sponsored by the Fed Bank of Kansas City. The MSCI All-Country World Index increased 1 percent as of 9:29 a.m. London time, halting a three-day retreat. Standard & Poor’s 500 Index futures added 1.7 percent. The dollar maintained losses against the euro after a gauge of German manufacturing growth for August exceeded economist estimates. The greenback traded 0.8 percent weaker against the shared European currency at $1.4471 as of 9:30 a.m. in London. An Energy Department report tomorrow may show gasoline stockpiles declined 1 million barrels from 210 million barrels in the seven days ended Aug. 19, according to a Bloomberg News survey of analysts. Crude inventories probably increased a second week by 1.5 million barrels, the survey shows. The industry-funded American Petroleum Institute will report its own data today. Libyan Revolt Brent fell yesterday, narrowing its record premium above U.S. futures by the most in five weeks amid speculation that an end to Muammar Qaddafi’s rule will lead to a recovery in the nation’s crude production. Rebel fighters hunted for the leader and declared his regime over, as the dictator’s forces kept up their fight in parts of Tripoli, now mostly in rebel hands. The Libyan revolt, which began in February, has reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 100,000 barrels a day last month, a Bloomberg News survey showed. That’s less than 10 percent of the 1.6 million barrels the nation pumped in January, before the uprising. Libya will probably boost supply to 585,000 barrels a day in the next 12 to 18 months, compared with an earlier estimate of 250,000 barrels, Goldman Sachs said in a report yesterday. The increase may allow the Organization of Petroleum Exporting Countries, with Libya now the smallest of 12 members by output, to delay using spare production capacity by three months, it said. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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