Oil Rises for First Time in Four Days on Dollar, U.S. Supplies

By Grant Smith

Sept. 22 (Bloomberg) -- Crude oil rose for the first time in four days before a report forecast to show U.S. crude supplies contracting, while a weaker dollar boosted the investment appeal of commodities.

U.S. crude oil inventories declined a fourth week, according to analysts surveyed by Bloomberg News before an Energy Department report tomorrow. Official data showed net crude oil imports by China, Asia’s largest consumer, rose 18 percent to 17.92 million metric tons in August, the second highest on record.

“Sentiment about the economy is better than it was a few months ago,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “I can imagine $70 or a bit above will persist for the next few weeks. The correlation between oil and the dollar is not as strong as a few weeks ago, but we see it again in play today.”

Crude oil for October delivery rose as much as $1.18, or 1.7 percent, to $70.89 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $70.86 at 1:08 p.m. London time. The contract expires today. The more widely traded November futures advanced $1.34 to $71.05.

Prices have gained 59 percent this year on speculation global fuel demand will recover as economies emerge from the recession, while a weakening dollar encouraged investors to buy commodities. Gold snapped a three-day decline, staying above $1,000 an ounce.

Crude Supplies

The dollar dropped to as low as $1.4822 per euro, its weakest against the single European currency in a year. The U.S. Federal Reserve is forecast to keep its benchmark interest rate unchanged, according to a Bloomberg survey of economists. The Federal Open Market Committee is expected to release a statement at about 2:15 p.m. New York time.

China’s net crude oil imports in August were second only to the record 19.2 million tons in July.

A weekly U.S. Energy Department report tomorrow may show crude oil inventories declined a fourth week, according to analysts surveyed by Bloomberg News.

Crude oil inventories fell 1.5 million barrels in the week to Sept. 18, from 332.8 million, according to the median of 11 estimates in a Bloomberg survey before the Energy Department’s weekly report. Nine of the analysts polled said stockpiles dropped and two forecast an increase.

Distillate fuel inventories probably increased 1.2 million barrels, the survey showed. Stockpiles, which include heating oil and diesel, were previously at 167.8 million barrels, the most since January 1983.

Gasoline Supply

Gasoline supplies are expected to have gained 200,000 barrels from 207.7 million the week before, which would be a third weekly increase, according to the median of responses.

Refineries operated at 85.9 percent of capacity last week, down 1 percentage point from the prior week, based on the median of survey responses. U.S. refineries usually shut processing units for maintenance in September and October as summer demand for gasoline wanes and before heating oil use rises in the winter.

The Energy Department is scheduled to release its Weekly Petroleum Status Report in Washington tomorrow. The industry- funded American Petroleum Institute will put out its own data later today.

Brent crude oil for November settlement rose as much as $1.16, or 1.7 percent, to $69.85 a barrel on the London-based ICE Futures Europe exchange. It traded at $69.81 a barrel, up $1.12, at 1:06 p.m. in London.

“Yesterday, in the absence of positive new economic news, we saw the oil prices were a bit lower,” said David Moore, commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Also, the fact that equity markets were off, that was also a negative for the oil price as well.”

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