Crude oil rose for a second day and was headed for a weekly gain in New York after stronger-than- forecast economic growth figures for the euro zone fanned speculation that fuel demand in Europe will increase.
Futures climbed as much as 1.5 percent after the Standard and Poor’s 500 Index rebounded, led by a gain in commodity companies. The U.S. currency slipped from the highest level versus the euro since April 1.
“Oil climbed as the S&P 500 rebounded,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The correlation between the two is alive and well. Investors look at the S&P as a sign of where the economy is going.”
Prices earlier fell as much as 0.5 percent after China’s inflation exceeded the government’s target, stoking speculation the central bank will raise interest rates to cool the economy.
In predicting future demand, more fragile recoveries in the US and Japan were offset by growth in developing economies, particularly India and China.
“These economic uncertainties are clouding market needs for the remainder of the year,” the report said. “If the slowdown in the US economy were to persist, this would likely affect demand growth. In Japan, the recent catastrophes have already dramatically reduced oil consumption… in contrast, Chinese economic growth continues to be stronger than expected.”
In London, Brent crude rose $1.73 to settle at $US117.63 per barrel on the ICE Futures exchange.