Oil Set for Biggest Weekly Gain in 2 Months Before Jobs Report

By Grant Smith

May 8 (Bloomberg) -- Crude oil rose for a third day in New York, heading for the biggest weekly gain since March before a report forecast to show that the U.S. cut fewer jobs in April.

Oil prices are up 8.5 percent this week after economic data indicated the worst of the global recession is over. Analysts predict the payroll report due today at 8:30 a.m. in Washington will show a loss of 600,000 jobs last month, down from 663,000 in March, according to a Bloomberg survey. Asian and European equities rose, extending the week’s gain to 4.5 percent.

“As increasing risk appetite pushes equity markets higher, sentiment in the oil market has become quite optimistic,” said Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich. “The momentum could take us to $60, but we’re skeptical about the short-term fundamentals while U.S. demand remains so weak.”

Crude oil for June delivery rose as much as $1.28, or 2.3 percent, to $57.99 a barrel in electronic trading on the New York Mercantile Exchange, and was at $57.96 at 11:52 a.m. London time. Oil, poised for the largest gain since the week ended March 20, is up 29 percent this year. Yesterday, oil closed at $56.71, the highest settlement since Nov. 14.

Gasoline rose to the highest in six months after Exxon Mobil Corp. temporarily shut down a unit that produces the fuel at its Baton Rouge refinery, the second largest in the U.S. Gasoline for June delivery rose as high as $1.7049 a gallon today on the Nymex, the highest since Nov. 5.

Economic reports this week showed fewer Americans filed claims for unemployment benefits, and U.S. refiners boosted operating rates last week to their highest level since December.

‘Consistent Run’

“Oil is maybe moving to a higher trading range, pushing through what looked like a key resistance level of $55 a barrel,” according to technical analysis by PVM Oil Associates Ltd.

Oil climbed from a low of $10.35 in December 1998 to an all-time peak of $147.27 last July. If oil reaches $62.65, that is equivalent to 38.2 percent of the 10-year rally, a milestone in the “Fibonacci” sequences that suggests additional gains are likely, according to the London-based PVM.

Stocks in Europe and Asia and U.S. index futures rose as Federal Reserve Chairman Ben S. Bernanke said results of the government’s review of the banking industry’s health “should provide considerable comfort.”

U.S. refineries increased their utilization by 2.7 percentage points to 85.3 percent last week ahead of the peak driving demand season this summer, the Energy Department said in a May 6 report.

‘Healthy Driving Season’

“With gasoline prices lower than last year, you’d think we’d have a more healthy driving season,” said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “You can argue that people will drive more because it’s a cheaper form of travel. Directionally we’re coming into a stronger demand season.”

The Organization of Petroleum Exporting Countries is likely to extend its record production cut when the group meets in Vienna on May 28, Mehr news agency reported, citing Ali Khatibi, the Iran’s OPEC governor.

OPEC has completed about 83 percent of an unprecedented series of supply reductions announced since September that total 4.2 million barrels a day, according to the International Energy Agency.

Brent crude oil for June settlement rose as much as $1.33, or 2.4 percent, to $57.80 a barrel on London’s ICE Futures Europe exchange. It was at $57.75 a barrel at 11:50 a.m. London time.

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