Oil Extends Gains as Dollar Drop Spurs Commodity Investments

July 10 (Bloomberg) -- Crude oil rose for a second day as the dollar slipped against major currencies, spurring demand for commodities as a hedge against inflation.

Oil snapped a six-day slump yesterday as reports showed a drop in initial U.S. jobless claims to the lowest since January, car sales in China surged the most since 2006 and U.S. stocks rose. The U.S. Dollar Index, which tracks its value against six major currencies, dropped for the first time in six days.

“The U.S. dollar index trading back down to 80 points only supports crude prices,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “Crude is just trading off of speculation on where the global economy is headed, and a big indicator is the U.S. equity market place.”

Crude oil for August delivery rose as much as 48 cents, or 0.8 percent, to $60.89 a barrel on the New York Mercantile Exchange, and traded at $60.80 at 9:20 a.m. Sydney time. Futures are up 36 percent since the start of the year.

Prices fell $11.35, or 16 percent, during the six days from June 30, the longest losing streak this year. Yesterday, futures touched $59.25, the lowest intraday price since May 19.

The dollar was at $1.4023 a euro at 6:10 a.m. in Tokyo, compared with $1.4020 yesterday on reduced demand for the safety of the U.S. currency. The pound, Swiss franc and Swedish kronor posted bigger gains against the dollar.

Jobless Claims

Initial jobless claims fell by 52,000 to 565,000, a lower level than forecast, in the week ended July 4, from a revised 617,000 the prior week, the Labor Department said yesterday in Washington. Jobless claims were estimated to fall to 603,000, according to the median forecast of 40 economists surveyed by Bloomberg News.

China’s passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, after government stimulus spending spurred a revival in the world’s third-largest economy. China is the second-biggest oil consumer after the U.S.

Gasoline for August gained 0.6 cents, or 0.4 percent, to $1.6698 a gallon at 8:42 a.m. Sydney time in New York. Yesterday, it climbed 3.05 cents, or 1.9 percent, to end the session at $1.6638 a gallon in New York.

U.S. stocks gained as an analyst upgrade of Goldman Sachs Group Inc. spurred a rally in financial shares and a rebound in natural-gas prices lifted energy producers, tempering a drop in drugmakers. The Standard & Poor’s 500 Index added 0.4 percent and the Dow Jones Industrial Average advanced 01. percent.

Brent crude for August settlement rose 67 cents, or 1.1 percent, to end yesterday’s session at $61.10 a barrel on London’s ICE Futures Europe exchange. The contract touched $59.76 yesterday, the lowest intraday price since May 26.