Oil Advances for Second Day on China’s Imports, Weaker Dollar

May 13 (Bloomberg) -- Oil rose for a second day after China, the world’s second-biggest energy-consuming country, said yesterday crude imports increased by 14 percent in April.

Deliveries reached 16.17 million metric tons last month, or 3.9 million barrels a day, the Chinese customs department reported. Oil also climbed as the dollar fell to the lowest level against the euro since March, bolstering demand for commodities as an alternative investment.

“The Chinese numbers are pretty stunning,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “The Chinese are looking at prices now as good value and they are worried about all of the dollar assets they have. They are buying everything, any raw material they can get their hands on.”

Crude oil for June delivery rose as much as 69 cents, or 1.2 percent, to $59.54 a barrel, and traded at $59.50 on the New York Mercantile Exchange at 8:47 a.m. in Sydney. Yesterday, the contract rose as much as $1.58, or 2.7 percent, to $60.08 a barrel before settling at $58.85 a barrel, the highest settlement since Nov. 11.

China will increase imports of commodities including oil and boost inventories of strategic raw materials to take advantage of weak prices, the nation’s economic planner said in March.

The country is also buying commodities as it attempts to diversify investments away from Treasuries. China boosted purchases of U.S. debt by 46 percent to a record last year. Copper imports by China, the world’s largest consumer, rose to a record for a third month in April, according to the customs office. Aluminum purchases also jumped to a record.

Dollar-Euro

The dollar traded at $1.3650 per euro at 6:10 a.m. in Tokyo, after dropping 0.5 percent yesterday and touching $1.3707, the weakest level since March 23.

U.S. crude stockpiles are at the highest since 1990 and probably gained 1 million barrels last week, according to the median of 15 responses in a Bloomberg News survey. Supplies rose to 375.3 million barrels in the week ended May 1, the highest since September 1990, the Energy Department said.

The industry-funded American Petroleum Institute reported yesterday that oil supplies fell 3.13 million barrels to 370.7 million last week.

API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

OPEC Production

The price of Nymex oil for delivery in July is 86 cents a barrel higher than for June, down from a 91-cent premium yesterday and the narrowest since March 19.

This structure, in which the future month’s price is higher than for the one before it, is known as contango and allows buyers to profit from storing oil. A narrowing spread reduces the incentive to stockpile crude oil.

Oil prices are up 33 percent this year, supported by record production cuts announced by the Organization of Petroleum Exporting Countries.

“Recently there has been some price improvement, which is good for producers,” Iran’s OPEC governor, Mohammad Ali Khatabi, said by phone from Tehran yesterday. “But like other experts, we should make clear to the ministers that consumption is not in good shape and stocks are increasing.”

OPEC output averaged 27.58 million barrels a day last month, down 75,000 from March, according to a Bloomberg News survey. It was the ninth straight monthly production decline. The 11 OPEC members with quotas, all except Iraq, pumped 25.255 million barrels a day last month, 410,000 more than their target of 24.845 million.

Keeping to Targets

“The April OPEC production numbers show that they are adhering pretty well to their targets,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Production is certainly lower than it was last year. Prices will remain supported until the cartel cheats more.”

OPEC ministers are scheduled to discuss output levels at a May 28 gathering in Vienna.

“It’s too early to say” what decision the group will make at its next meeting, Qatari Oil Minister Abdullah bin Hamad Al- Attiyah said at the opening of the South Hook liquefied natural gas terminal in Wales.

Analysts were split over whether gasoline stockpiles rose or fell last week. Supplies of distillate fuel, a category that includes heating oil and diesel, probably increased 1.25 million barrels, according to the Bloomberg News survey. The department is scheduled to release its weekly petroleum inventory report today at 10:30 a.m. in Washington.

Gasoline futures for June delivery dropped 1.23 cents, or 0.7 percent, to settle at $1.6679 a gallon in New York. Heating oil rose 0.61 cent, or 0.4 percent, to end the session at $1.507 a gallon.

Brent crude oil for June settlement rose 46 cents, or 0.8 percent, to end the session at $57.94 a barrel on London’s ICE Futures Europe exchange.