Prices climbed 3.8 percent after the Commerce Department report showed that work began on 583,000 homes at an annual rate, a 22 percent increase from January. Oil prices have plunged from a record $147.27 in July as the U.S., Europe and Japan face recessions. Gasoline and heating-oil futures prices surged, with the motor fuel reaching the highest in four months.
Crude oil for April delivery rose $1.81, or 3.8 percent, to $49.16 a barrel at 2:44 p.m. on the New York Mercantile Exchange, the highest settlement since Dec. 1. Futures touched $49.82, the highest intraday price since Jan. 6. Prices have increased 10 percent so far this year.
Gasoline futures for April delivery climbed 5.65 cents, or 4.1 percent, to $1.4238 a gallon in New York, the highest settlement since Nov. 5. Heating oil for April delivery gained 6.17 cents, or 5.1 percent, to end the session at $1.2747 a gallon, the highest since Feb. 26.
Today’s advance came amid speculation that the Federal Reserve will outline more plans to bolster the economy. The Federal Open Market Committee meets today and tomorrow.
The unexpected gain in housing starts and speculation about Fed policy also pushed U.S. equities higher. The Standard & Poor’s 500 Index climbed 3.2 percent to 778.12. The Dow Jones Industrial Average rose 2.5 percent to 7,395.78.
Algerian Oil Minister Chakib Khelil said OPEC’s compliance with quotas will improve to about 95 percent by the time the group meets in May. The Organization of Petroleum Exporting Countries may still take strong” measures to protect revenue should prices keep falling, Khelil, who held the group’s rotating presidency in 2008, said at a press briefing in Vienna.
OPEC agreed to hold output targets steady at its meeting in Vienna on March 15 on concern higher prices could harm an ailing global economy. Ministers pledged to tighten compliance with record cutbacks agreed on last year after crude oil fell more than $100 from July’s record.
The crude oil production target for 11 OPEC members bound by quotas is 24.85 million barrels a day, while actual output from those countries averaged 25.715 million in February, according to an OPEC report published on March 13. That means the group has completed 79 percent of its promised reduction.
Brent crude oil for May settlement increased $1.78, or 3.8 percent, to $48.24 a barrel on London’s ICE Futures Europe exchange.
Oil also rose because April options expire at the close of trading in New York today. April $50 calls, which represent the right to buy oil at that price, were the most-actively-traded options contracts on the Nymex yesterday.
An Energy Department report is forecast to show that U.S. crude oil inventories rose 1.5 million barrels last week, according to the median of 14 analyst estimates in a Bloomberg News survey. The department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.
Gasoline stockpiles probably dropped 1.5 million barrels from 212.5 million the prior week, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1 million barrels from 145.4 million, the survey showed.
Crude oil volume in electronic trading on the Nymex was 456,346 contracts as of 3:16 p.m. in New York. Volume totaled 540,413 contracts yesterday, 0.5 percent lower than the average over the past three months. Open interest yesterday was 1.22 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.