Crude oil rose as U.S. companies posted better than estimated earnings and the International Monetary Fund raised its forecast for global growth this year, signaling fuel consumption will climb. Oil rebounded after Morgan Stanley profits rose as fixed income trading revenue more than doubled from a year earlier. The IMF said the economy will expand 4.2 percent in 2010, the fastest pace since 2007, compared with a January projection of 3.9 percent. Prices dropped as much as 1.1 percent earlier when a report showed that U.S. supplies gained last week.
“These markets tend to move on expectations of what will be, rather than what is,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy. “The earnings are pointing to a significant recovery and today’s IMF report also points to increased growth. Demand is poised to grow, outpacing output.” Crude oil for June delivery rose 31 cents, or 0.4 percent, to $84.16 a barrel at 12:31 p.m. on the New York Mercantile Exchange. Oil traded at $84.30 before the release of the inventory report at 10:30 a.m. in Washington.
U.S. supplies of crude oil rose 1.89 million barrels to 355.9 million, the Energy Department report showed. A 750,000 barrel drop was forecast, according to a Bloomberg survey. Inventories of crude at Cushing, Oklahoma, where New York traded West Texas Intermediate oil is stored, surged 5.8 percent to 34.1 million barrels, the highest since the week ended Jan. 8. “There was a massive build at Cushing, which should be very bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “Between mid-February and mid-April supplies at Cushing have gone from a year on year deficit of 13 percent to a 15 percent surplus.”
Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net
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