Crude Oil Advances for Second Day on Gains in U.S. Equities

May 19 (Bloomberg) -- Crude oil rose for a second day as gains in the stock market increased optimism that the global economy is recovering.

U.S. stocks rallied, helping the Standard & Poor’s 500 Index recover more than half of last week’s loss, on better- than-forecast earnings by Lowe’s Cos. and after analysts recommended Bank of America Corp. The S&P500 Index rose 3 percent and the Dow Jones Industrial Average increased 2.9 percent.

“Sentiment has driven this market from its lows in the hopes of an imminent recovery,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “If we do see equities continue their rally, I think oil and a lot of other commodities are probably going to follow.”

Crude oil for June delivery rose 10 cents, or 0.2 percent, to $59.13 a barrel at 10:38 a.m. in Sydney on the New York Mercantile Exchange. Yesterday, the contract increased $2.69, or 4.8 percent, to settle at $59.03 a barrel, the highest settlement since Nov. 11. Futures are up 33 percent this year.

The June crude contract expires today. The more-actively traded July contract increased 8 cents to $59.67 a barrel at 10:38 a.m. in Sydney.

Gasoline for June delivery gained 7.75 cents, or 4.6 percent, to $1.7581 a gallon in New York, the highest settlement since Oct. 15.

Gasoline futures will average $1.40 a gallon during the summer, a 17 percent decline from May 15, according to surveys of five analysts by Bloomberg. Bets that gasoline will fall below $1.40 by May 26 have risen almost 10-fold in a month on the New York Mercantile Exchange.

U.S. Housing

“The housing market is going to be an area where the economy is going to need to see a recovery to really get a sense that the broader economy is going to turn around,” Hassall said.

U.S. housing starts increased in April to an annual rate of 520,000 from 510,000 in the previous month, according to the median forecast of 74 economists surveyed by Bloomberg. The Commerce Department is scheduled to release its report at 8:30 a.m. in Washington.

“We might be able to push above $60 if some of the macro data this week provides a bit more encouragement,” Hassall said.

The dollar may extend its decline against the euro on reduced demand for the greenback’s safety before the Commerce Department report is released. The dollar traded at $1.3561 versus the euro at 6:01 a.m. in Tokyo, after falling 0.5 percent yesterday. The yen was at 96.30 per dollar following a 1.1 percent drop after earlier touching 94.55, the strongest level since March 20.

Nigerian Fighting

The Movement for the Emancipation of the Niger Delta said that ships moving through the southern part of the country would be traveling at their own risk. Fighting in Nigeria has escalated since May 13 when militants said they responded to an army offensive by attacking military positions and hijacking a tanker.

MEND claimed responsibility May 17 for rupturing two pipelines supplying oil and natural gas from a Chevron Corp. facility to domestic refineries and power stations. The rebel group has threatened to blockade waterways in the southern region used for oil and gas exports.

Nigeria produces low-sulfur, or sweet, oil, prized by U.S. refiners because of the proportion of high-value gasoline and diesel it yields.

Angola, Africa’s second-biggest oil producer after Nigeria, will cut daily shipments by 6.8 percent in July. BP Plc, Total SA, Chevron Corp., Exxon Mobil Corp. and other companies are scheduled to load an average of 1.7 million barrels a day in July, compared with June’s 1.83 million, according to loading programs released through yesterday.

Demand Falls

U.S. crude-oil supplies fell 4.63 million barrels to 370.6 million in the week ended May 8, the first drop since February, the Energy Department reported last week. Stockpiles in the week ended May 1 were the highest since 1990.

Total U.S. daily fuel demand averaged 18.2 million barrels in the four weeks ended May 8, down 7.9 percent from a year earlier, according to the Energy Department. Gasoline demand averaged 9 million barrels in the same period, down 1.2 percent from a year earlier.

The Organization of Petroleum Exporting Countries should adhere closely to agreed production quotas to stabilize oil markets, OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos, said in a statement yesterday. The group meets next on May 28 in Vienna.

Brent crude for July settlement rose $2.49, or 4.4 percent, to end the session at $58.47 a barrel on London’s ICE Futures Europe exchange. It was the highest settlement since Nov. 10.