Oil rose a seventh day in New York, the longest run of gains since February, after U.S. gasoline supplies unexpectedly shrank and housing starts climbed, signaling fuel demand may increase amid an economic recovery.
Futures advanced as much as 1 percent to the highest level in seven weeks. Gasoline stockpiles decreased 1.8 million barrels last week, the Energy Department said in a report. They were forecast to climb by 1.2 million, according to a Bloomberg News survey. Crude inventories also fell and a measure of petroleum consumption rose for the third week. New U.S. home construction increased in June to the highest level in almost four years, figures from the Commerce Department showed.
“Market sentiment has turned more optimistic across the board,” said Victor Shum, the managing director of IHS Consulting in Singapore. “The U.S. oil inventory report showed draws in both crude oil and gasoline inventories. That is supportive for prices.”
Oil for August delivery gained as much as 85 cents to $90.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.58 at 3:03 p.m. Singapore time. The contract expires tomorrow, and the more active September future was up 70 cents at $90.87. Front-month prices gained 65 cents to $89.87 yesterday, the highest close since May 29, and are 8.4 percent lower this year.
Brent crude for September settlement was at $106.17 a barrel, up 1 percent, on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium to West Texas Intermediate of $15.30, from $14.99 yesterday.
U.S. oil demand averaged almost 19 million barrels a day in the past four weeks, up 0.4 percent, for a third consecutive year-on-year increase, the Energy Department report showed yesterday. Consumption in the past seven days rose 0.3 percent week-on-week to 18.6 million barrels a day.
Crude stockpiles dropped 809,000 barrels, according to the report. They were forecast to slip 1.3 million barrels, the median estimate of 10 analysts surveyed by Bloomberg News showed. Distillate inventories, a category that includes heating oil and diesel, increased 2.6 million barrels, compared with a projected gain of 1.3 million.
Housing starts climbed 6.9 percent to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, the Commerce Department reported in Washington yesterday. The median forecast of 79 economists surveyed by Bloomberg News called for 745,000.
“U.S. inventory figures are doing the right thing,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Housing is an area of the U.S. economy where we have seen what looks to be quite a step-up in growth in recent months, so that’s a mild positive.”
Oil in New York has technical resistance along its upper Bollinger Band, about $90.67 a barrel today, according to data compiled by Bloomberg. Sell orders tend to be clustered near chart-resistance levels. Crude’s 30-day stochastic oscillators have risen above 70, a level that signals gains in futures are exaggerated. Today’s reading is 81.1, the highest since March 6.
Crude’s decline this year has slowed a record expansion of U.S. oil drilling. The nation’s rig count rose 7.8 percent in the three months ended June 30, down from 18 percent a year earlier and the third-lowest quarterly increase since March 2009, according to Baker Hughes Inc. (BHI:US), a Houston oil-services company. Horizontal rigs dropped last week for the first time since May, said Smith Bits, a unit of Huston-based Schlumberger Ltd. (SLB:US), the world’s largest oilfield-services provider.
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