Crude Oil Rises for First Time in Five Days as Equities Gain

By Grant Smith

Sept. 4 (Bloomberg) -- Crude oil rose for the first time in five days as rising equity markets encouraged hopes that the economic recovery is still on track.

Oil is nonetheless set for a weekly decline amid forecasts that the Organization of Petroleum Exporting Countries will keep production targets unchanged when it meets next week. Floor trading in New York will close for Labor Day on Sept. 7, marking the end of the peak gasoline consumption period in the U.S., where the jobless rate is at the highest since 1983.

“Medium-term our forecast is for a weaker dollar that might support oil prices,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “But the bigger point is that the fundamental situation doesn’t support prices above $70, and risk aversion may lead to a correction.”

Crude oil for October delivery advanced as much as 82 cents, or 1.2 percent, to $68.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded for $68.05 as of 1:03 p.m. London time.

Oil has declined almost 6 percent this week, the biggest drop since the week to July 10, as early gains during each trading session have been erased before the close.

Europe’s Dow Jones Stoxx 600 Index advanced 1.4 percent to 233.95 at 1:36 p.m. in London.

OPEC members, due to meet in Vienna Sept. 9, have implemented about 71 percent of the 4.2 million barrels a day of supply cuts agreed on last year, according to data compiled by Bloomberg. The group pumps 40 percent of the world’s oil.

OPEC President

Jose Maria de Botelho Vasconcelos, the organization’s president and Angolan oil minister, said on Sept. 2 that the 12- member group would hold its current course to avoid higher oil prices derailing the global economic recovery.

OPEC will reduce shipments by 1.1 percent in the month to Sept. 19, according to consultant Oil Movements. The producer group will export 22.34 million barrels a day by sea in the four-week period, down from an average of 22.58 million barrels a day in the month to Aug. 22, the U.K. tanker tracker said in a report yesterday.

The U.S. jobless rate in August jumped to 9.7 percent, the highest since 1983, and employers cut another 216,000 jobs, highlighting threats to consumer spending.

The increase in the unemployment rate from 9.4 percent exceeded forecasts. The smaller-than-anticipated drop in payrolls was the least in a year, and followed a decrease of 276,000 in July that was larger than previously reported, Labor Department data showed today in Washington.

Brent crude oil for October settlement on the London-based ICE Futures Europe exchange traded up 20 cents at $67.32 a barrel as of 1:34 p.m. London time.

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