Oil Trades Near Two-Week High as U.S. Equities Advance on Alcoa

July 14 (Bloomberg) -- Crude oil traded near a two-week high in New York after U.S. stocks advanced and on optimism fuel demand will increase amid improved prospects for an economic recovery in the world’s biggest energy consumer.

Oil rose 2.9 percent yesterday as U.S. equities gained for the sixth straight day after Alcoa Inc.’s earnings topped analysts’ estimates. Prices also rose as the International Energy Agency forecast oil demand will grow in 2011. U.S. crude inventories probably fell last week, according to a Bloomberg News survey before a government report today.

“Sentiment has turned positive and commodities and equities are benefiting from that,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “It’s the start of the quarterly earnings season, which has kicked off on a positive note with Alcoa.”

Crude oil for August delivery traded at $77.26 a barrel, up 11 cents, in electronic trading on the New York Mercantile Exchange at 9:23 a.m. Sydney time. Yesterday, the contract rose $2.20 to $77.15, the highest level since June 28. Futures have gained 2.7 percent since the start of the year.

Global oil demand will increase 1.6 percent in 2011 to average 87.8 million barrels a day, the Paris-based IEA said in its first forecast for next year. It left its estimate for 2010 unchanged with a demand growth rate of 2.1 percent to an average 87.8 million barrels a day in a report released yesterday.

U.S. gasoline demand rose 2.1 percent from June 30 to July 6, the Tuesday after the July Fourth holiday, from a similar period last year, according to MasterCard Inc.’s SpendingPulse report yesterday.

Crude Supplies

U.S. crude stockpiles increased 1.74 million barrels to 353.5 million last week, according to a report from the American Petroleum Institute. The Energy Department will probably report that inventories fell 1.5 million barrels, a Bloomberg News survey of analysts shows.

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.

Profits for S&P 500 companies are projected to have increased 34 percent in the second quarter, according to analysts’ estimates compiled by Bloomberg. Alcoa, the largest aluminum producer, reported net income of $136 million, or 13 cents a share, exceeding the 11-cent average estimate of 17 analysts surveyed by Bloomberg.

Brent crude for August settlement gained $2.28, or 3.1 percent, to $76.65 a barrel on the London-based ICE Futures Europe exchange yesterday.