Crude Oil Trades Near $87 on Signs of U.S. Economic Recovery

April 7 (Bloomberg) -- Crude oil traded near $87 a barrel in New York after rising on signs that U.S. economic growth will accelerate, bolstering fuel use in the world’s biggest energy- consuming country.

Oil climbed above $87 for the first time since October 2008 yesterday on growth in American jobs and service industries. The U.S. government raised its 2010 oil price estimate on forecasts the global economy will rebound through the end of the year.

“The underlying sentiment in the market remains bullish, reflecting the positive economic news,” said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. “I’m skeptical about whether fundamentals really justify the oil price at current levels, and it may well pull back at some point.”

Crude oil for May delivery was at $86.66 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange at 8:58 a.m. Singapore time. Yesterday, the contract rose 22 cents, or 0.3 percent, to $86.84. Futures reached $87.09, the highest intraday level since Oct. 9, 2008.

Federal Reserve officials saw signs of a strengthening recovery that could be hobbled by high unemployment and tight credit, and some warned of raising rates too soon, according to minutes of their March meeting.

West Texas Intermediate oil, the U.S. benchmark, will average $80.74 a barrel this year, up from last month’s forecast of $80.06, according to the Energy Department’s monthly Short- Term Energy Outlook, released yesterday. That’s 31 percent higher than the 2009 average price of $61.66 a barrel.

Crude Supplies

U.S. crude oil inventories rose by 1.07 million barrels last week to 353 million, the industry-funded American Petroleum Institute said yesterday. The government will probably say inventories rose 1.35 million barrels, according to the median of estimates in a Bloomberg News analyst survey before an Energy Department report today.

Gasoline inventories fell 2.96 million barrels to 220.2 million, the API report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, climbed by 723,000 barrels to 148.3 million.

Supplies of gasoline probably dropped 1 million barrels from 224.9 million the prior week, the Bloomberg survey showed. Distillate stockpiles probably fell 1.13 million barrels from 144.6 million the prior week, according to the survey.

The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington.

Brent crude oil for May settlement traded at $86.05 a barrel, down 10 cents, on London’s ICE Futures Europe exchange at 8:52 a.m. Singapore time. Yesterday, the contract increased 27 cents, or 0.3 percent, to end the session at $86.15.