Crude Oil Rises, Set for Biggest Monthly Increase Since June

By Grant Smith

March 31 (Bloomberg) -- Oil rose, set for the biggest monthly gain since June, as some traders considered yesterday’s 8 percent plunge excessive and a weaker U.S. dollar bolstered the appeal of commodities.

Crude also gained as European stocks rebounded from the biggest drop in four weeks amid a recovery in consumer confidence. Oil has risen 8.8 percent this month after U.S. Treasury Secretary Timothy Geithner unveiled a plan to remove toxic assets from banks.

“Prices will stabilize around these levels,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. “We have some positive factors this morning reversing yesterday’s slump, the euro-dollar is giving support and equities in Europe are friendly.”

Crude oil for May delivery rose as much as 83 cents, or 1.7 percent, to $49.24 a barrel on the New York Mercantile Exchange. The contract traded at $48.93 a barrel at 10:15 a.m. London time.

Crude has gained 9 percent this quarter after tumbling 56 percent in the previous three months. This month’s gain was the biggest since a 9.9 percent jump in June 2008.

Yesterday, it fell $3.97, or 7.6 percent, to $48.41 a barrel, the lowest settlement on the Nymex since March 18 and the biggest decline since March 2, after President Barack Obama said that General Motors Corp. and Chrysler LLC have one last chance to “fundamentally restructure.”

Dollar Drop

The dollar fell against the euro for the first day in four, trading for $1.279 per euro, from $1.3165 yesterday. A weaker U.S. currency boosts the attraction of dollar-priced assets that can be used to hedge against inflation.

Europe’s Dow Jones Stoxx 600 Index added 1.8 percent to 173.49 at 9:11 a.m. in London, erasing its March decline.

U.S. crude oil stockpiles surged 3.3 million barrels to 356.6 million barrels in the week ended March 20, the highest since July 1993 and 13 percent more than average for this time of year, according to an Energy Department report on March 25. Supplies probably rose 3.5 million barrels last week, according to the median of nine responses in a Bloomberg News survey.

Brent crude oil for May settlement rose as much as $1.06, or 2.2 percent, to $49.05 a barrel on London’s ICE Futures Europe exchange. It was at $48.73 a barrel at 10:15 a.m. London time.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.