(Bloomberg) - Oil climbed as global equity markets advanced while the weakening dollar bolstered commodities.
Futures rose 2.1 percent in New York as stock markets rose worldwide on speculation that stimulus will be increased. The greenback declined against most of its peers, making raw materials denominated in the currency more appealing to investors. Oil tumbled Wednesday after government data showed U.S. gasoline inventories unexpectedly rose last week.
"We were ready for a rebound after the hard sell off yesterday," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $4.9 billion. "The main reason we’re up is the general risk-on appetite in all markets."
Oil has traded between about $44 and $52 a barrel since early June after almost doubling from a 12-year low in February amid a spate of supply disruptions and falling U.S. output. The fuel surplus means American refiners may process less oil even as crude supplies remain more than 100 million barrels above the five-year average for this time of the year.
West Texas Intermediate crude for August delivery rose 93 cents to settle at $45.68 a barrel on the New York Mercantile Exchange. The grade fell 4.4 percent to close at $44.75 on Wednesday, the lowest since May 10. Total volume traded was 20 percent above the 100-day average at 2:45.
Brent for September settlement increased $1.11, or 2.4 percent, to $47.37 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 4.6 percent to $46.26 a barrel on Wednesday. The global benchmark crude closed at a 95-cent premium to WTI for September delivery.
Financial shares led the S&P 500 Index higher, as the equity benchmark extended its record for a fourth day. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell as much as 0.5 percent.
"The strength in equities does promote a certain optimism about economic growth, which supports oil," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "The market remains at risk of making a further move to the downside because of the negative fundamentals."
Gasoline inventories rose 1.21 million barrels last week, according to the Energy Information Administration. Demand for the fuel fell during the week that included the U.S. Independence Day holiday - usually a peak consumption period - and output increased.
"Gasoline is looking very ugly right now, even though demand has been pretty healthy," O’Grady said. "Refiners might cut back on gasoline production soon, which, while it may offer the gasoline market some support, will be a a bearish factor for oil."
Refineries reduced operating rates by 0.2 percentage points to 92.3 percent of capacity in the week ended July 8. U.S. refiners typically increase utilization in early summer as they maximize gasoline output for the peak-demand driving season.
U.S. crude supplies fell 2.55 million barrels to 521.8 million last week, EIA data show. Inventories remain at the highest seasonal level in at least a decade. Inventories reached 543.4 million barrels in the week ended April 29, the highest since 1929.
"We’re in a well supplied market and there’s a risk of added supply," Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $133 billion of assets. "We haven’t made much of a dent in oil inventories."
Oil traders increased the fleet of ships deployed in the North Sea to store crude, the latest sign of faltering demand that has triggered the biggest build-up of stockpiles at sea since 2009. Woodside Petroleum Ltd. agreed to buy ConocoPhillips’s assets in Senegal for $350 million to gain a stake in exploration blocks off the West African nation. Gulf Keystone Petroleum Ltd. creditors will take control of the oil producer after low crude prices and erratic export payments left the company unable to service debts.
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