June 29 (Bloomberg) -- Oil rose, in the biggest two-day rally in seven weeks in New York, after the U.S. government said supplies dropped almost three times as much as expected.
Crude rose 2 percent after the Energy Department said inventories fell for a fourth week, the longest stretch of drops this year, as imports decreased. Oil has gained 4.1 percent since June 23, when it dropped 4.6 percent after the International Energy Agency announced the release of 60 million barrels from strategic reserves, half from the U.S.
“The numbers were very bullish for crude,” said Carl Larry, director of energy derivatives and research with Blue Ocean Brokerage in New York. “They show that we’re losing a lot of imports already, and we could see more of a decline in expected deliveries to the U.S. because of the IEA release.”
Crude for August delivery rose $1.88 to settle at $94.77 a barrel on the New York Mercantile Exchange. Prices advanced 4.6 percent in the past two sessions, the biggest two-day increase since May 10. Futures have risen 25 percent in the past year and have fallen 11 percent in the second quarter.
Brent oil for August settlement on the London-based ICE Futures Europe exchange gained $3.62, or 3.3 percent, to $112.40 a barrel.
Crude inventories declined 4.38 million barrels, or 1.2 percent, to 359.5 million barrels in the week ended June 24, more than the 1.5 million median forecast of 12 analysts surveyed by Bloomberg News. Imports fell 3 percent to 8.88 million barrels a day, the first drop in three weeks.
The industry-funded American Petroleum Institute said yesterday in a separate report that crude stockpiles slipped 2.7 million barrels to 360.3 million, a 10-week low.
Crude also advanced after Greek lawmakers voted to approve an austerity plan designed to stave off a debt default. Prime Minister George Papandreou clinched enough votes in parliament to pass the 78 billion-euro ($112 billion) package of budget cuts and state-asset sales.
“The mood on oil has been changing because we are potentially seeing a resolution of the Greek crisis,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “The IEA members’ 60 million barrels seems to have been priced in.”
Oil futures dropped 6.1 percent in London on the day of the IEA announcement.
Richard Jones, deputy executive director of the Paris-based agency, said today in Mexico City that members may decide next month to release more stockpiles.
The euro strengthened 0.4 percent to $1.4424 in New York. Earlier, it touched $1.4448, the highest intraday price since June 15. A stronger euro bolsters commodities as an alternative investment to the U.S. dollar.
“The situation in Greece has a psychological influence on the value of the euro, and that’s probably one of the biggest drivers for the oil market,” said Kyle Cooper, director of research for IAF Advisors in Houston.
Prices also advanced on concern that Tropical Storm Arlene will cause a shutdown of ports in Mexico’s oil-producing Bay of Campeche, Eugen Weinberg, Frankfurt-based head of commodities research at Commerzbank AG, wrote in a report today. The storm formed yesterday in the southwestern Gulf of Mexico.
Mexico is the second-biggest oil exporter to the U.S. after Canada. It supplied 1.19 million barrels a day in March, the last month for which Energy Department figures are available. Petroleos Mexicanos, Mexico’s state-owned oil company and Latin America’s largest producer, has wells in the bay, located south of the storm.
Near Hurricane Strength
Arlene is moving west at 8 miles (13 kilometers) per hour and is forecast to make landfall at near-hurricane strength on the northeastern coast of Mexico, the U.S. National Hurricane Center said in a bulletin at about 1 p.m. Mexico City time.
Crude also rose amid speculation OPEC may reduce output in response to IEA’s release of oil from reserves.
Saudi Arabia, OPEC’s largest producer, will proceed with plans to ensure the global market has enough oil, regardless of what the IEA does, a person familiar with policy at the oil ministry said.
Saudi Arabia estimates that consumption will rise by 1.2 to 1.5 million barrels a day in 2012 from this year’s level and the kingdom will contribute to meeting that demand, according to the person, who declined to be identified because he isn’t authorized to speak on the matter.
Saudi Arabia pledged to keep consumers sufficiently supplied after an OPEC meeting June 8 in Vienna at which members failed to reach an accord on Saudi-championed output increases. The London-based al-Hayat newspaper reported June 10 that it would boost output to 10 million barrels a day, compared with Bloomberg estimates of 8.9 million in May.
Oil volume in electronic trading on the Nymex was 556,279 contracts as of 2:32 p.m. in New York. Volume totaled 574,444 contracts yesterday, 15 percent below the average of the past three months. Open interest was 1.52 million contracts.
--With assistance from Rachel Graham in London and Brian K. Sullivan in Boston. Editors: Richard Stubbe, Dan Stets
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