Crude Oil Rises After Equities Rally and U.S. Stockpiles Fall

July 16 (Bloomberg) -- Crude oil rose for a second day as equities climbed and a government report showed a bigger-than-forecast drop in oil supplies in the U.S., the world’s largest energy consumer.

U.S. stocks rallied 3 percent after Intel Corp. forecast sales that beat analysts’ estimates and gauges of manufacturing improved. Crude inventories fell 2.81 million barrels to 344.5 million last week, the Energy Department said in a report yesterday.

“ The huge rally across the board in equities helped boost crude oil,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “The weekly EIA report showed a drop in crude oil inventories by 2.8 million barrels which lent support to higher crude prices as well.”

Crude oil for August delivery rose as much as 47 cents, or 0.8 percent to $62.01 a barrel on the New York Mercantile Exchange. The contract was at $61.80 at 9:54 a.m. Sydney time. Yesterday, it gained $2.02, or 3.4 percent, to settle at $61.54.

Crude stockpiles were forecast to decline 2.1 million barrels, according to analysts surveyed by Bloomberg News. Refineries operated at 87.9 percent of capacity, the highest since August.

“Crude oil is not in any shape to make another run at $70 and looks to remain near $60 with a possible downside risk,” Sander said.

The Dow Jones Industrial Average climbed 256.72 points, or 3.1 percent, its best gain in three months. The Standard & Poor’s 500 Index added 3 percent in New York, extending its biggest three-day advance since March.

Gasoline Inventories

Gasoline inventories climbed 1.44 million barrels to 214.6 million, the highest since April, the Energy Department report showed. Supplies were forecast to increase 875,000 barrels.

Gasoline for August delivery gained 0.98 cents to $1.7179 a gallon on the New York Mercantile Exchange at 9:32 a.m. Sydney time. Yesterday, the contract rose 6.15 cents, or 3.7 percent, to end the session at $1.7081.

Supplies of distillate fuel increased 553,000 barrels to 159.3 million in the week ended June 10, the highest since January 1985, the report showed. A 2 million-barrel gain was forecast, according to the median of 14 estimates by analysts in the Bloomberg News survey.

Brent crude for August settlement rose $2.23, or 3.7 percent, to end the session at $63.09 a barrel on London’s ICE Futures Europe Exchange yesterday.