Oil rises thanks to Bernanke

OIL rose to the highest level in more than a week in New York, climbing with equities on optimism that the economy willexpand and a report that US consumer spending gained in July.

Futures jumped 2.2% after the Commerce Department said purchases increased the most since February. Federal Reserve chairman Ben S Bernanke said recently the economic recovery is likely to improve in the second half of the year. The Standard & Poor’s 500 Index advanced as much as 2.8%.

“The consumer spending numbers looked better than expected,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “People interpreted Bernanke’s comments positively because the chairman is not pushing the panic button.”

Crude for October delivery rose $1.90 to $87.27 (€59.9) a barrel on the New York Mercantile Exchange, the highest settlement since August 17. Prices have fallen 4.5% this year. Brent oil for October settlement gained 52 cents, or 0.5%, to $111.88 a barrel on the London-based ICE Futures Europe exchange. The European benchmark traded at a premium of $24.61 to US West Texas Intermediate futures, compared with a record $26.21 on August 19.

The July increase in spending followed a 0.1% decline in June. The median estimate of 74 economists surveyed by Bloomberg News called for a 0.5% advance. Incomes grew 0.3% and the savings rate fell to a four-month low.

“As long as we look like we’re on the road to recovery, crude is going to be on the road to $100 once again,” said Carl Larry, director of energy derivatives with Blue Ocean LLC in New York. “We’re seeing a little bit of hope in the equity market and that’s helping carry us here. Everybody’s trying to take what Bernanke said on Friday and digest it.”

Bernanke said last week that the central bank still has tools to stimulate a recovery that has been weaker than forecast.

&Oil refineries along the East Coast were working to restore normal operations after Hurricane Irene passed through the region over the weekend. The storm killed at least 28 people from Puerto Rico to Connecticut.

ConocoPhillips is attempting to start an alkylation unit at its 238,000 barrel-a-day Bayway refinery in New Jersey after shutting it because of the storm, and Sunoco Inc shut a crude unit at its 355,000-barrel-a-day Philadelphia refinery yesterday after pumps in a tank farm that supply the unit flooded because of Irene, according to a people familiar with the plants’ operations.

Some of the Libyan oil output lost during an armed conflict with Muammar Gaddafi’s regime will resume within three weeks, Al Jazeera Aug. 27, citing Nouri Balroin, the head of Libya’s National Transitional Council’s production unit. A three-stage plan will restore the flow of oil to 1.6 million barrels a day within 15 months, he said, according to the Qatar-based network.

The country’s output fell to 100,000 barrels a day in July, less than 10 percent of the amount Libya pumped in January, before the uprising, a Bloomberg News survey showed.