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March 11 (Bloomberg) -- Oil rose in New York as equities advanced for a seventh day, bolstering optimism that U.S. fuel demand will grow.
Futures rallied after banks led gains in U.S. equities that pushed the Dow Jones Industrial Average to a record and the Standard & Poor’s 500 Index near the all-time high. Prices dropped as much as 1.2 percent in earlier trading as China’s industrial production trailed estimates and after Saudi Arabian crude output climbed in February from a 20-month low.
“I don’t see anything other than the equities supporting oil prices today,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “There tends to be a correlation between the S&P 500 and the oil market. Crude tested the downside earlier and couldn’t break through and it’s now bobbing back up.”
Crude oil for April delivery gained 11 cents to $92.06 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 27. The volume of all futures traded was 31 percent below the 100-day average. Futures are down 14 percent from a year earlier.
Brent oil for April settlement dropped 63 cents, or 0.6 percent, to end the session at $110.22 a barrel on the London- based ICE Futures Europe exchange. The volume of all futures traded today was 30 percent above the 100-day moving average. The European benchmark was at an $18.16 premium to WTI, narrowing for a fourth consecutive day.
The Standard & Poor’s 500 Index gained as much as 0.3 percent to 1,556.21, less than 1.3 percent below the record high set in intraday trading on Oct. 11, 2007. The Dow also climbed 0.3 percent, reaching an all-time high 14,441.76.
The gain in equities helped oil rebound from an early decline after Chinese government data showed the world’s second- biggest oil-consuming nation started the year with the weakest industrial growth since 2009.
China’s industrial output expanded 9.9 percent in January and February, according to the government. That’s lower than a 10.6 percent median estimate in a Bloomberg survey. Retail sales growth also slowed in the period and new local-currency loans were down in February, separate data showed.
Saudi Arabia raised crude production in February to 9.15 million barrels a day, up 100,000 barrels from the previous month, the Persian Gulf official said, asking not to be identified because the information is confidential. The kingdom reduced exports to 9.16 million barrels last month from 9.26 million, according to the official. Crude delivered from storage accounted for the excess of supply over production, the official said.
“If the Saudi production gain is confirmed, we should see further downward pressure on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
U.S. crude could be supported in the second and third quarters by pipeline “de-bottlenecking” in North America from April to June, according to Goldman Sachs Group Inc.
The balance at Cushing, Oklahoma, the largest oil storage hub in the U.S., could “shift into a large deficit” in the second quarter as refineries end maintenance and new pipeline capacity from the Permian Basin diverts crude to the Gulf Coast, Jeffrey Currie, Goldman’s head of commodities research in New York, said in an e-mailed report today.
Hedge funds cut bullish oil bets to a two-month low in the week ended March 5. Money managers cut net-long positions, or wagers on rising prices, by 4.4 percent to the least since Jan. 1, the Commodity Futures Trading Commission’s March 8 Commitments of Traders report showed. Bullish bets have fallen 24 percent from an 11-month high in mid-February.
Electronic trading volume on the Nymex was 365,968 contracts as of 3:39 p.m. It totaled 510,994 contracts March 8, 5.4 percent below the three-month average. Open interest was a record high 1.72 million contracts.
--With assistance from Lananh Nguyen in London. Editors: Richard Stubbe, Dan Stets