Oil Rises for the First Day in Three as Equities Pare Losses

By Grant Smith

April 15 (Bloomberg) -- Oil rose for the first time in three days in New York to trade above $50 a barrel as European stock indexes pared losses and drew investors to commodities.

Oil recovered earlier losses that were driven by forecasts that a U.S. government report will show crude stockpiles at their highest in more than 15 years. European stocks and U.S. index futures pared their declines as energy producers climbed. The MSCI World Index has advanced 21 percent since the start of March as crude has gained 25 percent.

“We are coming out of the darkest hole in the recession and we are going to see oil prices heading up towards the high $50s, low $60s level within the next six months,” Francisco Blanch, head of global commodities research at Merrill Lynch & Co., said in a television interview.

Crude oil for May delivery rose as much as $1.38, or 2.8 percent, to $50.79 a barrel on the New York Mercantile Exchange, trading for $50.56 at 11:37 a.m. London time. It earlier fell as much as 49 cents, or 1 percent, to $48.92 a barrel.

The Dow Jones Stoxx 600 Index declined 0.2 percent to 190.62 as of 11:35 a.m. in London, having earlier dropped as much as 1.2 percent. Futures on the Standard & Poor’s 500 Index were up 0.1 percent at 841.

“We still expect the U.S. stock market to be the intermediate price driver for most commodity complexes over the next few weeks,” Edward Meir, an analyst with MF Global Ltd. in Connecticut, said in a report dated today.

Inventory Forecast

Crude-oil stockpiles rose 1.75 million barrels in the week ended April 10 from 361.1 million the previous week, the highest level since July 1993, according to a Bloomberg survey before today’s Energy Department report.

The industry-funded American Petroleum Institute, which often reports similar data to the Energy Department, said yesterday that oil inventories rose 6.51 million barrels to 371.2 million last week, their highest since 1990.

Brent crude oil for May settlement was at $52.59 a barrel, 63 cents higher, on London’s ICE Futures Europe exchange at 11:31 a.m. London time. It declined 18 cents, or 0.3 percent, to end the session at $51.96 a barrel yesterday.

The May contract expires today. The more-active June contract was at $53.57 a barrel, 64 cents higher, at 11:36 a.m. London time.

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