Crude Oil Rises to Six-Month High on Gains in Equities Market

By Ben Sharples and Christian Schmollinger

May 19 (Bloomberg) -- Crude oil rose to the highest in six months in New York as gains in the stock market increased optimism that the global economy is recovering.

Oil also got a boost on speculation inventories fell last week, while Sunoco Inc. said a refinery fire forced the shutdown of the plant’s main gasoline unit. The rally in oil followed gains in stocks.

“Sentiment has driven this market from its lows in the hopes of an imminent recovery,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “If we do see equities continue their rally, oil and a lot of other commodities are probably going to follow.”

Crude oil for June delivery climbed as much as $1.12, or 1.9 percent, to $60.15 a barrel on the New York Mercantile Exchange, the highest since Nov. 11. Oil traded at $60.14 at 2:42 p.m. Singapore time. Futures are up 35 percent this year.

Prices were also supported by concerns of disruptions to African oil supplies as Nigerian militants threatened to block waterways used for energy exports.

The June crude contract expires today. The more-actively traded July contract gained $1.19, or 2 percent, to $60.78 a barrel at 2:43 p.m. in Singapore.

$60 Resistance

“$60 is still the resistance level,” said Clarence Chu, a trader with oil options dealer Hudson Capital Energy in Singapore. “Everybody is still looking at the June contract even though July is where the volume and the liquidity are.”

The MSCI Asia Pacific Index advanced 2.3 percent to 99.11 at 2:36 p.m. in Tokyo. The equities gauge has climbed 40 percent from a more than five-year low on March 9 and is set to close at the highest level since Oct. 6.

Crude-oil stockpiles dropped 1.75 million barrels in the week ended May 15 from 370.6 million the previous week, according to the median of eight estimates by analysts before an Energy Department report this week.

Inventories may fall as oil imports to the U.S., the world’s biggest crude user, decline. Supplies brought into the country fell 12 percent to 8.71 million barrels a day in the week ended May 8, the lowest since the week ended Sept. 12, the Energy Department said on May 13.

Refineries probably operated at 84.1 percent of capacity last week, up 0.4 percentage point from the previous week, according to the median of responses in the survey. Refinery operations usually climb for the peak gasoline-consumption period, which lasts from the Memorial Day weekend in late May to Labor Day in September.

Marcus Hook Refinery

Gasoline stockpiles fell 1.5 million barrels from 208.3 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, increased 950,000 barrels from 147.5 million.

The Energy Department is scheduled to release its weekly report on May 20 at 10:30 a.m. in Washington.

Sunoco, the largest refiner in the U.S. Northeast, closed a gasoline making unit and is operating its crude distillation plant at a reduced rate at it Marcus Hook, Pennsylvania, facility after a fire at the ethylene unit.

The refinery can process 175,000 barrels a day of crude oil into fuels including gasoline and diesel. The company plans to “optimize” operations at its plants in Philadelphia and Eagle Point, New Jersey, to meet customer needs, Sunoco spokesman Thomas Golembeski said yesterday.

Valero Plant

Valero Energy Corp., the largest U.S. refiner, released gases into the atmosphere from its gasoline-producing unit at its Delaware City, Delaware, refinery yesterday.

Gasoline for June delivery rose as much as 2.19 cents, or 1.3 percent, to $1.78 a gallon.

The Movement for the Emancipation of the Niger Delta said that ships near the southern part of the country would be traveling at their own risk. Fighting in Nigeria has escalated since May 13 when militants said they responded to an army offensive by attacking military positions and hijacking a tanker.

MEND claimed responsibility May 17 for rupturing two pipelines supplying oil and natural gas from a Chevron Corp. facility to domestic refineries and power stations.

Nigeria produces low-sulfur, or sweet, oil, prized by U.S. refiners because of the proportion of high-value gasoline and diesel it yields.

Brent crude for July settlement increased as much as 93 cents, or 1.6 percent, to $59.40 a barrel on London’s ICE Futures Europe exchange.

To contact the reporters on this story: Ben Sharples in Melbourne bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net