Oil Rebounds Above $74 in New York on U.S. Demand-Growth Bets

June 14 (Bloomberg) -- Crude oil rose in New York, extending last week’s gains, on speculation sustained growth in the U.S. economy will boost fuel demand from the world’s biggest energy consumer.

Oil climbed as much as 0.8 percent before reports this week that may show U.S. factories churned out more goods last month and the cost of living declined. This could point to a manufacturing-led recovery that isn’t generating inflation, according to a Bloomberg News survey of economists.

“It’s all about the economy,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Economic sentiment is going to remain the ultimate driver of this market for the foreseeable future.”

Crude oil for July delivery rose as much as 59 cents to $74.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.30 at 6:38 a.m. Singapore time. Futures increased 3.2 percent last week and are up 5.1 percent from a year ago.

Production at U.S. factories, mines and utilities increased in May for the 10th time in 11 months, according to the median estimate of 63 economists polled by Bloomberg News ahead of Federal Reserve figures due June 16.

Consumer prices probably slipped 0.2 percent in May, after declining 0.1 percent the previous month, the survey showed.

Consumer Sentiment

The Thomson Reuters/University of Michigan preliminary consumer sentiment index for the U.S. rose to 75.5 for June from 73.6 last month, data June 11 showed. That’s the highest since January 2008, beating a median 74.5 estimate from economists polled by Bloomberg News.

“Any concerns about the economy are going to have a major impact on oil,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “The strength of the market has been built on expectations of an economic rebound.”

Brent crude oil for July delivery rose as much as 30 cents, or 0.4 percent, to $74.65 a barrel on the London-based ICE Futures Europe exchange. It was at $74.63 at 6:15 a.m. Singapore time. The contract increased 3.1 percent last week.

The dollar dropped to $1.2138 per euro, from $1.2112 on June 11 in New York. The U.S. currency’s decline bolsters the investment appeal of commodities.