Bloomberg Crude Oil Rises as U.S. Equities Advance, Dollar Declines

May 14 (Bloomberg) -- Crude oil rose after U.S. equities increased and the dollar dropped against the euro, bolstering the appeal of energy futures as an alternative investment.

Oil advanced after the Standard & Poor’s 500 Index ended a three-day losing streak. The dollar declined as rising stock prices reduced the need for a refuge. Energy prices fell earlier when the International Energy Agency said world oil consumption will retreat this year by the most since 1981.

“The stock market rally is inspiring buying of energy futures,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “The market is more focused on inflation pressures and a possible economic rebound than on weak energy demand and plentiful supply.”

Crude oil for June delivery rose 60 cents, or 1 percent, to settle at $58.62 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Futures declined as much as $1.47, or 2.5 percent, to $56.55. Prices are up 31 percent this year.

U.S. stocks advanced on a decrease in bank borrowing and better-than-estimated earnings at CA Inc. The S&P 500 Index increased 1 percent to 893.07 and the Dow Jones Industrial Average climbed 0.6 percent to 8,331.32.

The dollar declined 0.4 percent to $1.3654 per euro from $1.36 yesterday, after appreciating to $1.3526 early today, the strongest level since May 8.

U.S. Inventories

U.S. crude-oil supplies fell 4.63 million barrels to 370.6 million in the week ended May 8, the first drop since February, the Energy Department said yesterday in a weekly report. The decline left inventories 18 percent higher than the five-year average for the week. They were the highest since 1990 in the week ended May 1.

Gasoline stockpiles dropped 4.15 million barrels last week. Inventories have dropped 9.02 million barrels in the past three weeks.

Gasoline for June delivery rose 3.49 cents, or 2.1 percent, to end the session at $1.7237 a gallon in New York, the highest settlement since Oct. 15.

The crude-oil market often follows gasoline during the second quarter as U.S. refineries prepare for the summer driving season. U.S. gasoline demand peaks between the Memorial Day holiday in late May and Labor Day in early September.

“Gasoline is leading the way going into the critical driving season,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock & Co. in Chicago, a division of MF Global Ltd. more...