Oil Rises a Second Day as Investors Seek Haven From Turmoil

By Christian Schmollinger

Sept. 18 (Bloomberg) -- Crude oil rose in New York, the biggest two-day gain in three months, as investors purchased commodities as a safe haven in the midst of Wall Street turmoil.

Oil climbed and gold surged the most in eight years yesterday as Goldman Sachs Group Inc. and Morgan Stanley plunged the most ever. Prices were supported by a fifth day of militant attacks in Nigeria, Africa's largest crude producer, that have disrupted 280,000 barrels a day of production.

``Oil has got a better chance than other commodities to stay strong,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``Commodities, especially oil, are where people want to put their money because we have structural supply problems.''

Crude for October delivery rose as much as 98 cents, or 1 percent, to $98.14 a barrel on the New York Mercantile Exchange. It was trading at $97.40 a barrel at 9:56 a.m. in Singapore. Oil has declined 34 percent from the record $147.27 a barrel reached on July 11.

Yesterday, oil rose $6.01, or 6.6 percent, to $97.16 a barrel. The two-day gain was the biggest since June 6. Oil futures tumbled more than $10 a barrel in the first two days of the week on concern financial-market disruptions may weaken the global economy and cut fuel consumption.

Gold Rally

Gold climbed for a second day, extending its biggest jump in 26 years, as investors sought a haven from the credit crisis that's sent equity markets tumbling. Silver also rose.

Gold for immediate delivery rose 0.6 percent to $868.65 an ounce at 9:20 a.m. in Sydney. The metal jumped 11 percent yesterday, its biggest gain since Sept. 3, 1982. Silver rose 1.7 percent to $12.16 an ounce.

U.S. crude-oil stockpiles fell 6.33 million barrels to 291.7 million barrels last week, according to the Energy Department. It was the fourth straight inventory decline. A drop of 3.5 million barrels was forecast, according to the median of responses by 11 analysts surveyed by Bloomberg News.

Prices also advanced after a U.S. government report yesterday showed that crude oil stockpiles dropped the most since May because of disruptions from Hurricane Ike.

U.S. fuel demand averaged 19.9 million barrels a day during the past four weeks, down 4.4 percent from a year earlier, the department said. Gasoline consumption averaged 9.21 million barrels a day over the period, down 2.6 percent.

Nigeria Militants

Nigeria lost 280,000 barrels daily of its crude output to attacks launched by armed militants in the Niger Delta oil region in the past five days, bringing currently shut output to about 1 million barrels a day, the state-run oil company said.

``Current shut-in production stands at about 1 million barrels a day, but it's not necessarily due to militant attacks,'' Levi Ajuonuma, a spokesman for the Nigerian National Petroleum Corp., said by phone from the country's capital, Abuja. ``Only 28 percent is because of militant action.''

The Movement for the Emancipation of the Niger Delta, the main militant group in the oil region, said it declared an ``oil war'' in the southern delta that accounts for nearly all of the country's oil after the military launched an offensive on Sept. 13 on its positions.

In the last five days the militant group, also known as MEND, has attacked pipelines and oil pumping stations run by the Nigerian units of Royal Dutch Shell Plc, Chevron Corp. and Eni SpA.

Brent crude oil for November settlement rose as much as $1.05, or 1.1 percent, to $95.51 a barrel on London's ICE Futures Europe exchange. It was at $95.18 a barrel at 9:58 a.m. Singapore time.

The contract yesterday rose $5.62, or 6.3 percent, to settle at $94.84 a barrel. Prices dropped the previous 14 days, the longest stretch since the contract was introduced in 1988.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.