Oil Extends Gains After Rising on Consumer Confidence, Equities

May 27 (Bloomberg) -- Crude oil extended gains after rising yesterday as a report showing a jump in U.S. consumer confidence triggered an advance in equities.

Oil rose to its highest settlement in more than six months in New York yesterday as U.S. benchmark stock indexes climbed for the first time in five sessions. The biggest gain in consumer confidence since 2003 spurred optimism the worst of the recession is over in the world’s largest oil-consuming nation.

“It’s the latest in a string of data which has suggested that a recovery is imminent,” said Toby Hassall, research analyst with Commodity Warrants Australia Pty. in Sydney. “If equities can march higher and the dollar weakens then perhaps oil might be able to build a base around $60 a barrel.”

Crude oil for July delivery rose as much as 50 cents, or 0.8 percent, to $62.95 a barrel on the New York Mercantile Exchange and was trading at $62.67 at 8:15 a.m. in Singapore. Futures gained 1.3 percent yesterday to $62.45 a barrel, the highest close since Nov. 5.

The Conference Board’s sentiment index surged to 54.9, more than forecast and the biggest increase since 2003, the New York- based research group said yesterday.

The Standard & Poor’s 500 Index increased 2.6 percent to 910.33 and the Dow Jones Industrial Average climbed 2.4 percent to 8,473.49.

“It is getting to a level now where we are going to need to see demand start to pick up if we are going to see this rally continue up to the mid-$60s,” Hassall said.

OPEC Meeting

The Organization of Petroleum Exporting Countries should “stay the course” on output policy, Saudi Oil Minister Ali al- Naimi said yesterday in Vienna, where the group meets on May 28. A Persian Gulf oil official familiar with the matter said May 25 that OPEC won’t change its quotas.

Saudi Arabia is the biggest and most influential member of OPEC. The producer group is likely to keep daily output quotas unchanged at 24.845 million barrels when it meets tomorrow, according to a Bloomberg News survey of 27 analysts.

Comments from other OPEC members May 25 gave mixed indications about the group’s likely course of action. Algerian minister Chakib Khelil said the group will be careful about harming the global economic recovery, while Libyan official Shokri Ghanem said there’s a 50 percent chance of a supply cut.

“If they do keep production at current levels then it should push oil back down, at least below $60,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle.

The 11 OPEC members with quotas, all except Iraq, pumped 25.812 million barrels a day last month, a report from the group on May 13 said, citing secondary sources, which include estimates from analysts and news organizations. That’s up 225,000 barrels a day from March.

Higher Inventories

U.S. crude oil supplies probably rose 50,000 barrels in the week ended May 22 from 368.5 million the previous week, according to the median of 10 estimates by analysts before an Energy Department report tomorrow.

Total U.S. daily fuel consumption averaged 18.3 million barrels in the four weeks ended May 15, down 7.6 percent from a year earlier, the department said last week.

Crude oil stockpiles held by the 28 nations advised by the International Energy Agency rose to 62 days of demand in the first quarter, according to the agency’s report earlier this month. That is up from 54 days in the year-earlier period and 58 days in the fourth quarter of 2008.

Brent crude for July settlement rose 24 cents, or 0.4 percent, to $61.48 a barrel at 8:18 a.m. in Singapore. Yesterday it gained $1.03, or 1.7 percent, to end at $61.24 a barrel on London’s ICE Futures Europe exchange. It was the highest settlement since Nov. 5.