Tuesday, August 3, 2010

Oil Is Near Three-Month High After Breaching $81 for First Time Since May

Oil traded near a three-month high after breaching $81 a barrel for the first time since May as global equities advanced because of improved prospects for an economic recovery.

Crude rose for a third day yesterday after the Institute for Supply Management’s U.S. manufacturing gauge fell less than forecast and companies including HSBC Holdings Plc reported better-than-expected earnings. Asian stocks rose. Oil supplies probably fell by 1.5 million barrels last week, a Bloomberg News survey showed before an Energy Department report tomorrow.

“We saw some robust earnings coming out of several heavyweight European banks, and the manufacturing data out of the U.S. held above expectations,” said David Taylor, a market analyst at CMC Markets Ltd. in Sydney. “Last night saw a string of better-than-expected numbers lift confidence and encourage investors back into the market.”

Crude oil for September delivery was at $81.51 a barrel, up 17 cents, in electronic trading on the New York Mercantile Exchange at 8:57 a.m. Singapore time. Yesterday, the contract rose $2.39, or 3 percent, to $81.34, the highest since May 4. Futures climbed 4.4 percent in July, the biggest monthly gain since March. Prices are up 2.7 percent this year.

The ISM’s manufacturing gauge fell to 55.5 in July from 56.2 a month earlier, the Tempe, Arizona-based group said. Economists had forecast the measure would drop to 54.5, according to the median of 74 projections in a Bloomberg News survey. Estimates ranged from 52.5 to 56.

Equities Advance

The Standard & Poor’s 500 Index increased 2.2 percent in New York and the Dow Jones Industrial Average rose 2 percent. The MSCI World Index, a gauge of equities in 24 developed nations, climbed 2.4 percent to the highest level since May 13.

The MSCI Asia Pacific Index gained 0.8 percent to 121.68 as of 9:38 a.m. in Tokyo, set for its highest close since May 5.

The U.S. has plans for “military options” it can use to stop Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, from developing nuclear weapons, the chairman of the Joint Chiefs of Staff said on NBC’s “Meet the Press.”

A tropical depression formed yesterday in the middle of the Atlantic Ocean, the National Hurricane Center said. The system has maximum sustained winds of 35 miles (56 kilometers) per hour, 4 mph less than the threshold to be declared a tropical storm and given a name, according to a bulletin released at about 11 a.m. Miami time.

August and September are the most active months of the Atlantic hurricane season. Storms can threaten states along the U.S. Gulf of Mexico which account for 31 percent of U.S. oil output and 43 percent of the country’s refining capacity.

Brent crude for September settlement rose as much as 23 cents, or 0.3 percent, to $81.05 a barrel on the London-based ICE Futures Europe exchange, and was at $81.01 at 9:04 a.m. Singapore time. Yesterday, the contract gained $2.64, or 3.4 percent, to $80.82.