Crude Oil Gains a Second Day After Dropping Below $70 a Barrel

May 20 (Bloomberg) -- Crude oil gained for a second day in New York as some investors took the view a drop below $70 a barrel made the commodity attractive to buy.

Oil rose for the first time in seven days yesterday as the euro rebounded from a four-year low against the dollar after Axel Weber, an ECB Governing Council member, said the euro region must tighten its fiscal rules. Crude inventories in the U.S. increased less than expected last week, according to an Energy Information Administration report.

“We’ve come off very sharply the last couple of weeks and that’s been attributable to a stronger dollar, widespread risk aversion and a global growth outlook which has been dented by sovereign debt issues in Europe,” Toby Hassall, research analyst at CWA Global Markets Pty in Sydney, said by telephone today. “There will be those that are looking at the declines and seeing an opportunity to get long at these levels.”

Crude oil for June delivery gained 48 cents, or 0.7 percent, to $70.35 a barrel, in electronic trading on the New York Mercantile Exchange at 11:13 a.m. Sydney time. Yesterday, the contract rose 46 cents, or 0.7 percent, to settle at $69.87. June futures expire today.

The more active July contract climbed as much as 75 cents, or 1 percent, to $73.23 a barrel. It was at $72.68 at 11:19 a.m. Sydney time.

Prices fell early yesterday after Germany’s prohibition on short-selling sparked concern that regulation will increase. German Chancellor Angela Merkel laid out proposals to gain control over “destructive” financial markets after she imposed a unilateral ban on naked short-selling, or bets on the decline of assets an investor doesn’t own.

Crude Supplies

“The euro zone is trying to take actions to address these fiscal concerns,” David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney, said by telephone today. “The U.S. EIA data was not too bad in the sense that inventories were up modestly for crude, and down for gasoline and distillate fuel.”

U.S. supplies of crude oil rose 162,000 barrels to 362.7 million in the week ended May 14, an Energy Department report showed yesterday. Stockpiles were forecast to increase 500,000 barrels, according to the median of 15 analyst estimates in a Bloomberg News survey.

Inventories at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, climbed to a record, the report showed. Stockpiles increased 917,000 barrels to 37.9 million, the highest level since the Energy Department started keeping records at the storage hub in 2004.

Gasoline inventories fell 294,000 barrels to 221.8 million. Supplies of gasoline were forecast to decline by 900,000 barrels, according to the Bloomberg News survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 979,000 barrels.

Brent crude oil for July settlement traded at $73.79 a barrel, up 10 cents, on the London-based ICE Futures Europe exchange. Yesterday, the contract declined 74 cents, or 1 percent, to end the session at $73.69.