Crude Oil Gains as U.S. Stocks Trim Losses, Equity Futures Rise

March 31 (Bloomberg) -- Crude oil rose for the first day in three, as U.S. equities erased some of their losses after the close of floor trading yesterday, and stock futures advanced.

Oil is poised for its best-performing first quarter in three years and its first positive quarter since the second three months of 2008. Prices fell the most in four weeks yesterday as tumbling equity markets signaled that the recession in major energy-consuming countries may deepen, curbing fuel use.

Oil has “mimicked” the Dow Jones Industrial Average, said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “The Dow rallied to only close down 250 instead of 300, so oil traded a bit higher in the after hours.”

Crude oil for May delivery rose 25 cents, or 0.5 percent, to $48.66 a barrel at 9:28 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, it fell $3.97, or 7.6 percent, to $48.41 a barrel, the lowest settlement on the Nymex since March 18. It was the biggest decline since March 2.

Prices are up 9.1 percent this year.

Oil dropped yesterday after President Barack Obama said that General Motors Corp. and Chrysler LLC have one last chance to “fundamentally restructure.” GM plunged as much as 34 percent as the company’s recovery plan was rejected by the government and Chief Executive Officer Rick Wagoner was forced to resign.

“The General Motors news was a rather pointed reminder that the economy and oil demand are nowhere near a recovery,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “There was a lot of excitement last week because of rising stock prices, which pushed oil prices too high.”

Stocks Slump

U.S. stocks slumped the most in three weeks yesterday on the warning to automakers and because the administration said that some banks will need more government aid. The Standard & Poor’s 500 Index declined 3.5 percent to 787.53. The Dow Jones Industrial Average fell 254.16, or 3.3 percent, to 7,522.02. It was down more than 300 points when oil floor trading ended.

Dow futures expiring in June rose 14 to 7,494 at 9:14 a.m. Sydney time. S&P futures added 1.90, or 0.2 percent, to 786.20.

The euro fell against the dollar for a fourth day. The dollar strengthened 0.1 percent to $1.3189 per euro from $1.3199.

“The stronger dollar and falling equities are a recipe for lower prices,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York.

The Reuters/Jefferies CRB Index of 19 commodities fell 7.09 points, or 3.2 percent, yesterday to 215.17, the biggest one-day drop since March 2.

Supplies, OPEC

U.S. crude oil stockpiles surged 3.3 million barrels to 356.6 million barrels in the week ended March 20, the highest since July 1993 and 13 percent more than average for this time of year, according to an Energy Department report on March 25. Supplies probably rose 3.5 million barrels last week, according to the median of nine responses in a Bloomberg News survey.

The Organization of Petroleum Exporting Countries will watch for improvement in the global economy when it meets May 28 to decide whether more oil needs to be removed from the market, Iran’s OPEC governor said. The group agreed on March 15 to keep output quotas unchanged, saying members have to cut a further 800,000 barrels a day to comply with existing targets.

“Another cut will depend on the economic situation,” the governor, Mohammad Ali Khatibi, said in an interview in Kuwait yesterday. “OPEC is trying to bring stock levels to within the five-year average of about 55 days. Stocks are maybe two days more than the average now.”

Brent crude oil for May settlement fell $3.99, or 7.7 percent, yesterday to end the session at $47.99 a barrel on London’s ICE Futures Europe exchange. Brent touched $47.66, the lowest since March 18.