Oil Is Set for Fourth Weekly Gain on Economic Recovery Optimism

Aug. 7 (Bloomberg) -- Crude oil traded near $72 a barrel, poised for a fourth weekly gain on optimism the outlook for a global economic recovery has improved.

Oil is set to rise 3.2 percent this week as U.S. equities gained and the dollar weakened, increasing investor demand for commodities priced in the U.S. currency. The Standard & Poor’s 500 Index reached a nine-month high on Aug. 5.

“The recent combination of a marked improvement in global business sentiment and a weaker dollar has proved a potent mix for commodities,” analysts at Barclays Capital, led by Gayle Berry, said in a report. “The coordinated rise in new order indices in the U.S., Japan and the euro zone, where most are now either close to or just above 50, has coincided with the surge in industrially driven commodity prices.”

Crude oil for September delivery traded at $71.70 a barrel, down 24 cents, on the New York Mercantile Exchange at 9:23 a.m. in Singapore. Yesterday, the contract fell 3 cents to settle at $71.94. Futures have gained 61 percent this year and climbed 20 percent in the past four weeks.

Oil Little Changed Near $72 as Dollar Rises, U.S. Equities Fall

Aug. 7 (Bloomberg) -- Crude oil was little changed near $72 a barrel after U.S. equities dropped and the dollar strengthened, reducing the appeal of commodities as an alternative investment.

U.S. stocks declined after a JPMorgan Chase & Co. downgrade sent health-care companies lower and concern grew that the market’s recent rally outpaced the economy’s prospects. U.S. crude-oil stockpiles climbed 1.67 million barrels to 349.5 million last week, an Aug. 5 Energy Department report showed.

“Fundamentals are still pretty week and we haven’t really seen any real trend improvement recently,” Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne said by phone today. “All of the strength seems to be based on sentiment.”

Crude oil for September delivery traded at $71.89 a barrel, down five cents on the New York Mercantile Exchange at 9:48 a.m. Sydney time. Yesterday, the contract fell 3 cents to settle at $71.94. Prices are up 3.31 percent this week, headed for a fourth week of gains.

The Standard & Poor’s 500 Index dropped 0.8 percent to 994.63 in New York and the Dow Jones Industrial Average fell 57.66 points, or 0.6 percent, to 9,223.31.

The dollar gained versus the euro yesterday on speculation traders canceled bets against the dollar before a U.S. Labor Department payroll report today. The report is projected to show the jobless rate rose to 9.6 percent in July from 9.5 percent in June, according to a Bloomberg News survey of economists. The U.S. currency traded at $1.4370 per euro at 10:01 a.m. Sydney time, from $1.4345 yesterday.

U.S. Consumption

“Unemployment is pretty important for U.S. consumption,” Westmore said. “Everyone is still a little worried about the U.S. consumer because when you look at the most recent GDP numbers it doesn’t look like the consumer has come back yet.”

The Organization of Petroleum Exporting Countries will increase crude shipments for the first time since June, according to consultant Oil Movements. OPEC will raise deliveries by 0.4 percent in the four weeks ending Aug. 22, the tanker tracker said yesterday, as higher prices encourage members to exceed production quotas.

Brent crude oil for September settlement fell 68 cents, or 0.9 percent, to $74.83 a barrel on London’s ICE Futures Europe Exchange yesterday.