Oil Trades Near $70 After Rising as Equities Gain, Dollar Falls

Oct. 6 (Bloomberg) -- Crude oil traded little changed near $70 a barrel in New York after rising yesterday on optimism fuel demand will increase amid improved prospects for an economic recovery in the U.S., the biggest energy consumer.

Stocks climbed as a report from the Institute for Supply Management showed that U.S. service industries returned to growth after 11 months of contraction. Commodities also gained as the falling dollar bolstered the appeal of raw materials as a hedge against inflation.

“The major headline supporting the rally was the September ISM non-manufacturing report showing positive growth,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “Oil was pushed higher thanks to the 100 point move in the Dow Jones” Industrial Average, he said.

Crude oil for November delivery was at $70.49 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange at 10:26 a.m. Sydney time. Yesterday, the contract gained 46 cents to settle at $70.41. Prices have increased 58 percent since the start of the year.

The Standard & Poor’s 500 Index added 1.5 percent in New York yesterday, its steepest gain in a week. The Dow Jones rose 112.08 points, or 1.2 percent. Australia’s benchmark S&P/ASX 200 Index increased 1.3 percent at 10:28 a.m. Sydney time. The dollar traded at $1.4651 per euro at 8:09 a.m. in Tokyo, from $1.4648 yesterday.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the U.S. economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.

Crude Supplies

U.S. crude-oil inventories probably rose last week as refineries performed seasonal maintenance, a Bloomberg News survey showed. Stockpiles increased 2 million barrels from 338.4 million in the week ended Oct. 2, according to the median of 11 estimates by analysts before the department’s report tomorrow.

Refiners often idle units for repairs and upgrades, known as turnarounds, in September and October as gasoline demand drops and before heating-oil use rises. Crude-oil imports fell 2.7 percent to an average 9.53 million barrels a day in the week ended Sept. 25.

Supplies of distillate fuel, a category that includes heating oil and diesel, declined 400,000 barrels from 171.1 million the prior week the survey showed. Stockpiles in the week ended Sept. 25 were at the highest level since 1983. The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.

Brent crude oil for November settlement dropped 3 cents to settle at $68.04 a barrel on the London-based ICE Futures Europe exchange yesterday.