Oil Rises From Two-Week Low After Report Shows Drop in Supplies

Sept. 2 (Bloomberg) -- Oil rose from a two-week low after an industry-funded report showed a decline in crude stockpiles in the U.S., the world’s biggest energy consumer.

Oil snapped two days of losses after the American Petroleum Institute said in a report late yesterday that crude supplies dropped by 3.19 million barrels last week, bolstering optimism fuel demand is rebounding. A report by the U.S. Energy Information Administration later today is likely to show stockpiles declined, according to a Bloomberg News survey.

Should the API figures be “any indication of the EIA numbers tonight, those numbers could be construed as supportive,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “The broader economy has shown signs it’s turning around.”

Crude oil for October delivery gained as much as 44 cents, or 0.7 percent, to $68.49 a barrel on the New York Mercantile Exchange and traded at $68.10 at 9:54 a.m. Sydney time. Yesterday, the contract fell 2.7 percent to $68.05, the lowest settlement since Aug. 17.

Prices climbed as much as $1.41 a barrel yesterday when reports showed that manufacturing in the U.S. and China, the second-biggest energy consumer, expanded in August. The U.S. and China are responsible for more than 30 percent of global crude- oil demand.

“Sentiment has been riding high over the last few months on hopes the economy is turning around,” Hassall said. “We got a little bit of evidence of that last night.”

Crude Stockpiles

Crude inventories dropped to 343.5 million barrels in the week ended Aug. 28, the API report showed. The Energy Department’s EIA may say supplies declined by 900,000 barrels from 343.8 million, according to the median of responses from 11 analysts.

Brent crude oil for October settlement gained 14 cents, or 0.2 percent, to $67.87 a barrel on the London-based ICE Futures Europe Exchange at 10:08 a.m. in Sydney. The contract dropped $1.92, or 2.8 percent, to $67.73 yesterday.

Gasoline supplies fell 2.81 million barrels to 206.9 million last week, the API report showed. Inventories probably fell 900,000 barrels, a sixth weekly decline, according to the Bloomberg survey.

Gasoline for October delivery gained 0.78 cent to $1.79 a gallon in New York at 9:23 a.m. Sydney time. Yesterday, the contract fell 2.77 cents to end the session at $1.7822.