Crude oil rises as equities advance

New York :  Crude oil rose for a second day in New York as equities rallied and a report showed US refinery activity surged to its highest level in almost two years.

Oil gained 1 per cent on Wednesday as the Federal Open Market Committee said economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period". Gasoline supplies fell 1.24 million barrels last week, a report from the Energy Department showed. They were forecast to increase, according to a Bloomberg News survey.

"The big jump in refinery utilisation signals that the overhang may be refined away," said Tobias Merath, head of commodity research at Credit Suisse Group in Zurich. "A couple more weeks of rising refinery rates and we could see inventories come down."

Crude oil for June delivery rose as much as $1.23 (Dh4.51), or 1.5 per cent, to $84.45 a barrel in electronic trading on the New York Mercantile Exchange and traded at $84.22 at 12.46pm London time. Brent crude for June settlement was up 92 cents at $87.08 a barrel on the London-based ICE Futures Europe exchange.

Brent's premium to New York futures is now $2.86 a barrel and reached $3.34 on April 27, the highest since August 17.

The Stoxx Europe 600 Index was up 1 per cent at 260.90. The dollar weakened to $1.3267 against the euro, compared with $1.3221 on Wednesday, increasing the appeal of commodities.

Positives

"The Fed seemed to re-emphasise the strength in the US economy, the commentary really focusing more on the positives of the recovery, and that's probably had an impact," said Ben Westmore, a minerals and energy economist at National Australia Bank in Melbourne.

"The EIA data was positive in the sense that gasoline stocks fell unexpectedly."

Refineries operated at 89 per cent of capacity, up 3 percentage points from the prior week, and the highest level since July 2008, the Energy Department report showed.

Gasoline consumption in the US peaks during the so-called summer driving season, which lasts from the Memorial Day weekend in late May to Labour Day in early September.

US inventories of crude oil rose 1.96 million barrels to 357.8 million last week, the highest level since June, the report showed. Stockpiles were forecast to climb 1 million barrels, according to a Bloomberg News survey. Imports increased 0.7 per cent to 9.68 million barrels a day, the most since September.