Oil Extends Gains Above $80 After Bernanke’s Recovery Comments

Feb. 25 (Bloomberg) -- Crude oil extended its gains, trading above $80 a barrel, after rising as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is in a “nascent” recovery.

Oil climbed 1.5 percent yesterday as Bernanke told the House Financial Services Committee private-sector demand growth for goods and services will fuel the rebound. The Energy Department reported U.S. oil supplies gained 3.03 million barrels last week to 337.5 million, the highest since November.

“That the price of crude keeps going up despite inventories highlights the fact that growth is the story,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The current state of, and medium-term expectations of, U.S. and global growth is the single most important factor in terms of crude prices.”

Crude oil for April delivery rose 32 cents, or 0.4 percent, to $80.32 a barrel in electronic trading on the New York Mercantile Exchange at 10:02 a.m. Sydney time. Yesterday, the contract rose $1.14 to settle at $80.

Bernanke said a slack labor market and low inflation will allow the Federal Open Market Committee to keep its benchmark lending rate low “for an extended period.” The rate has been in a range of zero to 0.25 percent for more than a year. The Fed will need to start tightening policy “at some point.”

U.S. Fuel Demand

U.S. fuel consumption rose 1.3 percent from a year earlier to 19.1 million barrels a day in the four weeks ended Feb. 19, the Energy Department said. Supplies of gasoline dropped 895,000 barrels. They were forecast to increase 600,000 barrels in a Bloomberg News survey of analysts.

Crude stockpiles were forecast to increase by 1.9 million barrels, according to the survey.

Distillates, including heating oil and diesel fuel, fell 591,000 barrels to 152.7 million, the department said. They were estimated to drop 1.5 million barrels in the survey. Refinery utilization jumped 1.42 percentage points to 81.2 percent, the highest level since the week ended Jan. 8. Operations were forecast to gain 0.2 percent.

Brent crude for April settlement increased 84 cents, or 1.1 percent, to $78.09 a barrel on the ICE Futures Europe exchange in London yesterday.