Oil Is Little Changed After Rising on Equity Gains, Dollar Drop

April 24 (Bloomberg) -- Crude oil traded little changed in New York after rising in the past three days as U.S. equity markets gained and the dollar dropped against the euro, bolstering the appeal of commodities.

Oil jumped 1.6 percent yesterday after U.S. stocks advanced as better-than-estimated earnings at companies from Marriott International Inc. to ConocoPhillips and EBay Inc. overshadowed falling home sales and higher jobless claims. The decline in the U.S. currency increased demand for crude and precious metals as a hedge against inflation.

“Investors seem to have no problem buying stocks with very low earnings because they feel earnings will go much higher,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “The positive move is passing onto the oil market and keeping it up near $50 a barrel.”

Crude oil for June delivery traded at $49.69 a barrel, up 7 cents, at 7:24 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, crude futures rose 77 cents to settle at $49.62 a barrel. Prices are up 11 percent this year.

Oil, set for a third week of declines, has fallen 66 percent from a record $147.27 a barrel reached on July 11 because of reduced global demand for crude.

“There’s a hard asset play due to dollar weakness,” said John Kilduff, senior vice president of energy at MF Global Inc. in New York. “Until there is firm evidence that the stimulus package is working and the economy is growing, we will keep waffling around here.”

Oil Stockpiles

Futures have traded have traded between $43.83 and $54.66 in the past month as surging U.S. inventories coincided with rising equity prices. Earlier this week, the U.S. Energy Department reported crude stockpiles rose for a seventh consecutive week to the highest since September 1990.

“The market will continue to consolidate on either side of $50 in the foreseeable future because of inflation worries,” Kilduff said.

The euro rose against the yen and the dollar after a report showed an index of European services and manufacturing industries contracted in April at the slowest pace in six months, adding to evidence the economic slump is easing. The euro gained 0.8 percent against the dollar to $1.3115, from $1.3005 yesterday.

“Prices aren’t really supported by the fundamentals,” said Antoine Halff, head of energy research at Newedge USA LLC in New York. “We are seeing demand for oil on paper, not physical supply. Last year investors were looking for yields and this year they are looking for safety.”

Fuel Demand

U.S. crude oil stockpiles rose 3.86 million barrels to 370.6 million and gasoline inventories climbed 802,000 barrels to 217.3 million, the Energy Department report showed.

Total daily fuel demand in the U.S., the world’s largest oil consumer, averaged 18.5 million barrels a day in the four weeks ended April 17, down 6.5 percent from a year earlier, according to the department.

“The uptrend in the stock market this March has had a major impact on commodities,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant. “Commodity markets are pricing in a much better picture of the economy than was the case a few months ago.”

The Organization of Petroleum Exporting Countries will load about 22.27 million barrels a day in the four weeks ending May 9, down from 22.4 million a day in the month ended April 11, Oil Movements, the Halifax, England-based tanker-tracker, said in a report yesterday.

OPEC agreed at three meetings last year that the 11 members with quotas would cut output by 4.2 million barrels a day to 24.845 million. The members with production targets, all except Iraq, pumped 25.567 million barrels a day in March, according to a monthly report the organization released April 15.

Floating Storage

Frontline Ltd., the world’s largest supertanker operator, said traders are storing 100 million barrels of oil at sea, enough to supply Europe for five days. The amount is about 25 percent more than Frontline estimated in January and will help buoy tanker rates.

About 45 very large crude carriers are storing oil, as well as other smaller vessels, Jens Martin Jensen, interim chief executive officer of Frontline’s management unit, said by phone from Singapore yesterday.

“There’s still downside risk,” said Halff. “The market will be vulnerable to further bearish news. It doesn’t have to be just oil, it could news about the economy as a whole.”

Brent crude oil for June settlement rose 30 cents, or 0.6 percent, to end the session at $50.11 a barrel on London’s ICE Futures Europe exchange.