Oil Rises After Industry Report Shows Drop in Gasoline Supplies

By Ben Sharples

July 15 (Bloomberg) -- Crude oil rose, snapping three days of declines, as stocks advanced and an industry report showed a decline in gasoline inventories in the U.S., the world’s largest energy consumer.

Oil climbed from an eight-week low after the industry-funded American Petroleum Institute said gasoline supplies fell 69,000 barrels yesterday. A report today from the Energy Department may show that stockpiles gained for a fifth week, according to analysts surveyed by Bloomberg News.

“The API data that was released was probably a little supportive for the oil price,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Crude oil stocks were down and gasoline stocks were down fractionally as well.”

Crude oil for August delivery gained as much as 60 cents, or 1 percent, to $60.12 a barrel on the New York Mercantile Exchange. The contract was at $60.09 at 10:55 a.m. Sydney time. Yesterday, it declined to $59.52, the lowest settlement since May 18.

U.S. stocks climbed as better-than-estimated retail sales boosted consumer shares, while energy producers climbed as natural gas prices jumped the most in a month. The Standard & Poor’s 500 Index added 0.5 percent and the Dow Jones Industrial Average rose 0.3 percent.

“Equities have had a slightly more positive tone the first couple of days this week, which is also supportive of oil,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “There seems to be some support around this $60 level.”

Gasoline Supplies

The Energy Department report will probably show gasoline supplies rose 875,000 barrels in the week ended July 10, according to the median of 14 responses in the Bloomberg News survey.

Gasoline for August delivery gained 1.2 cents, or 0.8 percent, to $1.6596 a gallon in New York at 9:22 a.m. Sydney time. Yesterday, the contract rose 0.4 percent to $1.6466.

Supplies of distillate fuel, a category that includes diesel and heating oil, probably rose 2 million barrels last week, the survey showed. Distillate fuel stockpiles increased 3.74 million barrels to 158.7 million in the week ended July 3, the highest since January 1985, according to the department.

Crude inventories fell 1.6 million barrels to 346.8 million last week, the API report showed. Supplies probably declined 2.1 million barrels, according to the survey.

“If we were to see the department come out with something other than an increase in stockpiles that would be somewhat supportive, considering we’ve had four straight weeks of increase,” Hassall said.

Dueling Forecasts

The department is scheduled to release its weekly petroleum supply report at 10:30 a.m. in Washington. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

Daily crude-oil consumption worldwide will increase by 500,000 barrels, or 0.6 percent, to 84.3 million in 2010 as industrial production gradually picks up after this year’s recession, the Organization of Petroleum Exporting Countries said yesterday in a report.

The International Energy Agency forecast in a July 10 report that global demand will increase by 1.4 million barrels a day, or 1.7 percent, to 85.2 million next year, in a July 10 report.

Nigeria’s main rebel group, the Movement for the Emancipation of the Niger Delta, declared a 60-day cease-fire in its local campaign targeting oil and gas installations after authorities freed leader Henry Okah. The cease-fire, which came into force at midnight local time, had no immediate impact on the oil market.

Brent crude oil for August settlement rose 49 cents, or 0.8 percent, to trade at $61.35 at 10:38 a.m. Sydney time. Yesterday the contract rose 17 cents, or 0.3 percent, to end the session at $60.86 a barrel on London’s ICE Futures Europe Exchange.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net