Oil Trades Above $82 a Third Day as U.S. Economic Reports Boost Optimism

Crude oil traded above $82 a barrel for a third day after U.S. reports showed service industries and payrolls rose more than forecast in July, signaling fuel demand may increase amid improved prospects for an economic recovery.

Oil remained near a three-month high after gaining 7 percent in the previous five days as an index of U.S. service industries grew to 54.3 in July, according to the Institute for Supply Management. Economists forecast the index of non- manufacturing businesses, which covers about 90 percent of the economy, would fall to 53. Crude stockpiles dropped, while fuel supplies rose last week, the Energy Department said.

“The ISM non-manufacturing index, which is generally seen as a good indicator of activity in the U.S., was up more than expected,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “It’s a good sign for distillate use and oil demand generally. The broad change in fundamentals is positive for oil prices, but it will take a little while to work off the residual stocks.”

Crude oil for September delivery was at $82.46 a barrel, down 1 cent, in electronic trading on the New York Mercantile Exchange at 10:14 a.m. Sydney time. Yesterday, the contract fell 8 cents to settle $82.47. On Aug. 3, oil settled at $82.55, the highest level since May 4. Futures have gained 14.5 percent in the past year.

U.S. companies added 42,000 workers in July, compared with a revised 19,000 in June, according to figures yesterday from ADP Employer Services, a private report based on payrolls. Economists surveyed by Bloomberg News had forecast a gain of 30,000, according to the median estimate.

Equities Gain

U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest close in more than two months, after the reports. The S&P 500 climbed to 1,127.24 in New York, its highest closing level since May 17. The Dow Jones Industrial Average advanced to its highest point since May 13.

“Wall Street rose overnight on the back of better-than- expected private sector jobs numbers,” said David Taylor, a market analyst at CMC Markets Ltd. in Sydney. “This brought confidence back into the market.”

U.S. oil supplies decreased 2.78 million barrels to 358 million, according to an Energy Department report. They jumped by 7.31 million barrels in the week ended July 23, the biggest increase since March 19. Inventories were forecast to decline 1.65 million barrels in the Bloomberg survey.

Gasoline Supplies

U.S. gasoline supplies increased 729,000 barrels to 223 million in the week ended July 30, the highest level since April 30, the Energy Department reported. They were forecast to drop by 1 million barrels, based on the median estimate of 17 analysts in a Bloomberg News survey.

Gasoline inventories were the highest for the final week in July in Energy Department data going back to 1990. Refinery utilization jumped 0.6 percentage point to 91.2 percent in the week ended July 30.

Brent crude for September settlement traded at $82.28 a barrel, up 8 cents, on the London-based ICE Futures Europe exchange at 10:11 a.m. Sydney time. Yesterday, the contract dropped 48 cents, or 0.6 percent, to $82.20.