Oil Extends Gains on U.S. Home Sales Growth, Crude Supply Drop

June 3 (Bloomberg) -- Oil gained for a second day in New York after U.S. home sales rose and an industry-funded report showed a decline in the country’s crude inventories, bolstering optimism that the economic recovery will accelerate.

Oil advanced as the Standard & Poor’s 500 Index gained after the index of pending home resales climbed 6 percent, exceeding the median forecast of economists surveyed by Bloomberg News. The American Petroleum Institute said crude supplies fell 1.42 million barrels last week. An Energy Department report today may show stockpiles were unchanged.

“Any time there is a plus sign in front of the S&P, chances are oil will move higher,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The housing number is giving the S&P and oil a boost even though it doesn’t directly lead to much additional demand.”

Crude oil for July delivery increased 85 cents, or 1.2 percent, to $73.71 a barrel in electronic trading on the New York Mercantile Exchange at 9:29 a.m. Sydney time. Yesterday, the contract rose 28 cents to settle at $72.86.

The S&P 500 increased 2.6 percent to 1,098.38, and the Dow Jones Industrial Average rose 2.3 percent to 10,249.54. Home sales were projected to rise 5 percent in April following a revised 7.1 percent gain in March, according to the median of 40 forecasts in the Bloomberg survey.

Gasoline Supplies

U.S. gasoline inventories declined by 962,000 barrels last week, according to a report from the American Petroleum Institute. Today’s Energy Department report will probably show supplies of the motor fuel fell 500,000 barrels last week from 221.6 million the prior week, a fourth consecutive decline, according to a Bloomberg News survey.

Gasoline demand in the U.S. at the pump surged 3.7 percent last week to the highest level since August 2007 as drivers filled their tanks for the Memorial Day weekend, MasterCard Inc. reported yesterday. Motorists bought an average 9.71 million barrels of gasoline a day in the week ended May 28, MasterCard said in its SpendingPulse report.

The department is scheduled to release its weekly report today, a day later than usual because of the Memorial Day holiday. The Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Iraq and the United Arab Emirates, the fourth- and fifth- largest oil producers in the Organization of Petroleum Exporting Countries based on Bloomberg estimates, said yesterday that they’re pleased with current price levels.

Brent crude oil for July settlement rose $1.04, or 1.4 percent, to $73.75 a barrel on the London-based ICE Futures Europe exchange yesterday.