By Ben Sharples
June 9 (Bloomberg) -- Crude oil gained in New York, snapping two days of losses, after Nobel Prize-winning economist Paul Krugman said the U.S. recession may end later this year, prompting speculation fuel demand may increase.
Krugman, a Princeton University economist, said yesterday he wouldn’t be surprised “if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.” Oil has more than doubled from the $32.40 a barrel it slumped to Dec. 19 from July’s $147.27 record as the global recession curbed energy use.
“Oil, being seen as a lead indicator, is one of the first things to go and I think things are set for recovery,” said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “The top-down picture is that the market is feeling the worst is behind it.”
Crude oil for July delivery gained as much as 96 cents, or 1.4 percent, to $69.05 and was at $68.98 on the New York Mercantile Exchange at 4:29 p.m. in Sydney. Yesterday, the contract fell 35 cents, or 0.5 percent, to settle at $68.09. Futures touched a seven-month high of $70.32 on June 5.
The U.K. housing market showed signs of “stabilizing” in May as the smallest balance of real-estate agents and surveyors in 18 months reported price declines, the Royal Institution of Chartered Surveyors said today in a report in London.
China’s top currency regulator said today it has relaxed controls on overseas lending, estimating the measures could encourage as much as $30 billion of new financing for businesses to expand abroad.
Dollar Moves
A weaker dollar has supported oil’s recovery, increasing the appeal of commodities as a hedge against a drop in the U.S. currency. The dollar fell in the past three months against all of the 16 most-traded currencies tracked by Bloomberg except the yen on speculation the Fed’s purchase of up to $300 billion in Treasuries to support the economy will undermine the greenback. The dollar gained to $1.3861 per euro as of 1:20 p.m. in Tokyo from $1.3900 yesterday when it advanced to $1.3806, the strongest level since May 28.
“To keep this uptrend in place we are going to need to see evidence in physical demand recovery and perhaps not too much more strengthening of the U.S. dollar,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney.
Analysts were split over whether crude-oil stockpiles rose or declined last week. Supplies were probably unchanged at 366 million barrels, according to the median of eight respondents in a Bloomberg News survey. Four analysts forecast a decline and four said there was an increase.
Gasoline Supplies
Gasoline supplies probably rose 1.15 million barrels in the week ended June 5 from 203.2 million the previous week, the survey showed. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably increased 1.05 million barrels from 150 million.
Gasoline for July delivery gained 0.35 cents to $1.9395 a gallon in New York at 3:47 p.m. in Sydney. Yesterday, it slipped 1.86 cents, or 1 percent, to end the session at $1.936.
Cosmo Oil Co., the Japanese refiner partly owned by the government of Abu Dhabi, will cut crude oil processing by 6.2 percent in July because of weak domestic demand.
The refiner will process 2.15 million kiloliters (13.5 million barrels) in July, spokesman Katsuhisa Maeda said by phone from Tokyo. In June, it will process 1.64 million kiloliters, down 20.7 percent, he said.
Oil & Natural Gas Corp., India’s biggest energy explorer, said its overseas crude output will fall this year as fields age, and an increase is likely after new areas in Brazil and Myanmar start production by 2012.
Brent crude for July delivery rose as much as 78 cents, or 1.2 percent, to $68.66 a barrel on London’s ICE Futures Europe exchange. It was at $68.58 at 3:54 p.m. Sydney time. Futures touched $69.91 on June 5, the highest since Oct. 21.
