INTERNATIONAL. Crude oil rose in New York on expectations fuel demand will recover after equity markets climbed on signs the global economy is stabilising.

Stock markets climbed after a US Commerce Department report yesterday showed an unexpected increase in orders for durable goods, the first in seven months. Oil stockpiles at Cushing, Oklahoma, the delivery point for New York-traded futures, fell 2.2 million barrels, the most since October 2007, the Energy Department said yesterday. Overall US oil inventories gained.

“There is still a sense of optimism in the overall markets,” said Victor Shum, a senior principal at consultants Purvin & Gertz in Singapore. “Even though the crude oil build is very significant and bearish in that sense, there are some elements of hope there. The crude oil levels in Cushing have actually dropped and inferred gasoline demand has risen.”

Crude oil for May delivery rose as much as 60 cents, or 1.1%, to US$53.37 a barrel on the New York Mercantile Exchange. It was at US$53.27 a barrel at 1.04 pm Singapore time. Prices are up 20% this year.

The S&P 500 added 1% to 813.88 and has jumped almost 11% in March for its best gain since 1991. The MSCI Asia Pacific Index gained 0.3% to 84.57 as of 10.33 am in Tokyo and has risen from a five-year low on 9 March.

Equities are climbing after durable goods orders, for items such as refrigerators and computers, increased 3.4% in the US last month after dropping 7.3% in January. A second Commerce report indicated new-home sales jumped 4.7% from a record low pace in January.

Consumption of fuels rose 2.2% to 19.2 million barrels a day last week. Gasoline demand in the week ended 20 March was up 1.6% to 9.1 million barrels a day.

Still, total daily fuel demand averaged over the past four weeks was 19.1 million barrels, down 3.2% from a year earlier.

Crude oil supplies rose 3.3 million barrels to 356.6 million last week, the Energy Department said yesterday. Inventories were forecast to increase by 1.1 million barrels, according to a Bloomberg News survey.

The inventory gain was the 22nd in 26 weeks. The increase left supplies 13% higher than the five-year average for the period, the department said. Stockpiles gained 3.5 million barrels in the US Gulf Coast region, known as PADD 3, where the majority of the country's refining capacity is located.

“Usually a build like that in PADD 3 means the refineries aren’t taking the crude,” said Clarence Chu, a trader at options dealer Hudson Capital Energy in Singapore. “Now is the time when the refineries are shut down for maintenance.”

Other plants are closing as demand for fuels has declined. Refineries operated at 82% of capacity, down 0.1 percentage point from the prior week, the Energy Department said.

Total, Europe’s third-largest oil company, is shutting output at its Port Arthur, Texas, refinery in response to weakening demand. The company said in a filing with the Texas Department of Environmental Quality on 24 March that it began closing units at the facility.

Production at the facility, which has the capacity to process 240,000 barrels of oil a day, will be stopped for weeks, according to United Steelworkers union members who work at the plant.

Gasoline stockpiles dropped 1.14 million barrels to 214.6 million last week. The decline left inventories 0.4% lower than the five-year average for the week, the department said. A 650,000-barrel drop was forecast, according to the median of 14 analyst responses in a Bloomberg News survey.

Distillate supplies declined 1.58 million barrels to 143.9 million, leaving stockpiles 25% above the five-year average for the period. A 100,000-barrel drop was forecast.

Brent crude oil for May settlement rose as much as 81 cents, or 1.6%, to US$52.56 a barrel, on London’s ICE Futures Europe exchange. It was at US$52.45 a barrel at 12.37 pm Singapore time. The contract declined US$1.75, or 3.3%, to US$51.75 a barrel yesterday.

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