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Oil climbed 0.4 percent after the G-8 said the recovery “is becoming more self-sustained,” in a statement following a two-day summit in Deauville, France. Stocks and commodities advanced. A report that U.S. consumer spending gained less than forecast in April sent the dollar lower, boosting commodities’ appeal as an alternative investment.
“They definitely seem to be more confident in the recovery, and I think that’s giving us a psychological boost,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is the most optimistic they’ve sounded for some time.”
Crude for July delivery rose 36 cents to settle at $100.59 a barrel on the New York Mercantile Exchange. Prices have increased 35 percent in the past year.
The G-8 leaders said that the strengthening economy will pave the way to cuts in the debt built up during the recession that followed the 2008 financial crisis.
Purchases in the U.S. rose 0.4 percent last month as food and fuel prices increased, Commerce Department figures showed today in Washington. The gain followed a revised 0.5 percent advance the prior month and compared with the 0.5 percent median estimate of economists surveyed by Bloomberg News.
The dollar fell 1 percent to $1.4291 against the euro at 3:23 p.m. in New York. It touched $1.4309 earlier, the lowest level since May 20.
“The dollar selloff is pushing commodities higher,” said Andrew Johnston, a London-based commodities trader at One Financial Markets.
The S&P GSCI index of 24 commodities increased 0.6 percent to 698.72 as natural gas, aluminum and copper surged 2 percent or more. Nineteen of the commodities advanced.
The Standard & Poor’s 500 Index rose 0.4 percent to 1,331.10 in New York, and the Dow Jones Industrial Average increased 38.82 points, or 0.3 percent, to 12,441.58.
Oil prices also rose amid unrest in the Middle East and as gasoline prices surged because of power outages at Texas City, Texas, refineries owned by BP Plc, Valero Energy Corp. and Marathon Oil Corp.
Syrian security forces fired on anti-government protesters in the cities of Deir Al-Zour, Homs and Zabadani, near the border with Lebanon, while “violently” dispersing a rally in the Rukn al-Din neighborhood of Damascus, said Mahmoud Merhi, head of the Arab Organization for Human Rights.
Yemen’s Republican Guards clashed with the country’s Nihm tribe, killing 15 members as they tried to prevent an army regiment from reaching the capital, Sana’a, according to the opposition website al-Sahwa.
“You’ve got all kinds of unrest in Syria, you’ve got Yemen starting to break down,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. With Nymex floor trading closed until May 31 for the U.S. Memorial Day holiday, “who in their right mind would take home a short?” O’Grady said. Shorts are bets that prices will drop.
Gasoline futures rose for a sixth day in New York after the blackout, the second since April 25. BP said its refinery was operating normally and Valero and Marathon were restarting their plants today.
Gasoline for June delivery increased 4.37 cents, or 1.4 percent, to $3.092 a gallon on the Nymex.
OPEC is likely to increase production quotas to 27 million to 27.5 million barrels a day when it meets June 8 in Vienna to “assuage” pressure on consumer nations to release emergency stockpiles, JPMorgan said in a report today.
The International Energy Agency, the Paris-based adviser to 28 nations, has indicated it may tap supplies as unrest in Libya disrupts exports.
Crude may rise next week after Goldman Sachs Group Inc. and Morgan Stanley increased their price projections, a Bloomberg News survey showed. Fourteen of 36 analysts, or 39 percent, forecast oil will climb through June 3. Twelve respondents, or 33 percent, predicted prices will decline and 10 estimated little change.
Goldman, which correctly advised investors to sell oil and copper last month before a price slump, boosted its 12-month prediction for Brent crude to $130 a barrel from $107, analysts led by Jeffrey Currie said May 24 in a report. Morgan Stanley raised its estimate by 20 percent to an average $120 this year and by 24 percent to $130 in 2012.
Brent oil for July settlement slipped 2 cents to $115.03 a barrel on the London-based ICE Futures Europe exchange.
Oil volume in electronic trading on the Nymex was 375,232 contracts as of 3:23 p.m. in New York. Volume totaled 678,008 contracts yesterday, 0.6 percent higher than the three-month average and the most since May 18. Open interest was 1.51 million contracts.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
