Oil Set for Fifth Week of Gains on U.S. Growth Plan, Dollar

By Angela Macdonald-Smith and Mark Shenk

March 20 (Bloomberg) -- Crude oil is poised to gain for a fifth week, the longest winning streak in 11 months, after rising above $50 a barrel on the Federal Reserve’s plans to spur growth by spending $1 trillion buying back debt.

Oil climbed 7.2 percent yesterday to close at a three-month high after the Fed said it was seeking to purchase U.S. Treasuries, mortgage-backed bonds and other debt, raising expectations that efforts to end the global recession will boost fuel demand. Commodities surged the most this year as the dollar weakened against the euro.

“The dollar and equities markets certainly seem to be flowing positively into oil,” said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “There’s a lot of sidelined interest in commodities markets as people try to pick the bottom so it’s no surprise we’ve seen quote a strong response in some of the commodities.”

Crude oil for April delivery fell 61 cents to $51.00 a barrel on the New York Mercantile Exchange in after-hours electronic trading at 12:24 p.m. in Sydney. Oil is up 10 percent this week, set for its longest series of weekly gains since April 2008.

Yesterday, futures rose $3.47 to $51.61 a barrel, the highest settlement since Nov. 28. The April contract expires at the close today. The more-active May contract slipped 45 cents to $51.59 a barrel in after-hours trading after jumping 6.4 percent yesterday.

Brent crude oil for May settlement was at $50.33 a barrel, down 34 cents, or 0.7 percent, at 12:36 p.m. Sydney time. Yesterday the contract jumped 6.3 percent, to $50.67 on London’s ICE Futures Europe exchange, the highest close since Nov. 28.

OPEC, Dollar

Oil has risen about 50 percent in the past three months from the Dec. 19 close of $33.87 a barrel. Crude has gained 14 percent so far this year as record production cuts by the Organization of Petroleum Exporting Countries started to reduce a supply glut caused by the worst economic crisis since World War II. Prices are down 65 percent from July’s record of $147.27 a barrel.

OPEC will cut crude oil shipments 3.3 percent in the four weeks ending April 4 as producers seek to adhere to quotas, tanker-tracker Oil Movements said yesterday. The group decided at a March 15 meeting to hold output targets steady, pledging to tighten compliance with quotas.

OPEC members “have been rewarded now with a higher price,” Daniel Yergin, chairman of Cambridge Energy Research Associates, said in a Bloomberg Radio interview.

Dollar Slide

The trade-weighted Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, slid yesterday for an eighth day, the longest stretch in a year.

The dollar was down 1.4 percent to $1.3667 per euro from $1.3474 March 18.

The decline in the value of the U.S. currency, which helped push oil to the July record, is “not yet” on the agenda of OPEC’s next meeting on May 28, the group’s president, Jose Maria Botelho de Vasconcelos, said yesterday.

Gold yesterday jumped the most since September and copper surged to the highest since November on the Fed announcement. The Reuters/Jefferies CRB Index of 19 prices rose 11.36, or 5.3 percent, to 225.30, the highest since Jan. 26.

To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net