By Christian Schmollinger and Ayesha Daya March 1 (Bloomberg) -- Crude oil rose for a second day on expectations that economic growth in the U.S. will boost fuel demand in the world’s largest energy consumer and after a Feb. 27 earthquake in Chile boosted copper prices. Oil extended gains made on Feb. 26 when the U.S. reported its economy expanded 5.9 percent in the fourth quarter, the most in six years. The Chilean quake forced Anglo American Plc and Codelco to halt some copper mine operations after power cuts. “The market’s sentiment on oil demand has turned back to bullish after the U.S. data,” said Andy Sommer, an analyst at Elektrizitaets-Gesellschaft in Dietikon, Switzerland. “U.S. economic growth is definitely important for the market, but the question remains how big the slowdown will be later in 2010.” Crude for April delivery rose as much as 96 cents, or 1.2 percent, to $80.62 a barrel in electronic trading on the New York Mercantile Exchange, and was at $80.24 at 11:35 a.m. London time. In London, April Brent crude gained 0.8 percent to $78.21 on the ICE Futures Europe exchange. Nymex crude gained 1.9 percent on Feb. 26 after the U.S. gross domestic product report showed investment in equipment and software increased at the fastest pace in a decade, renewing optimism that the recession has ended. Federal Reserve Chairman Ben S. Bernanke said last week that the U.S. economy is in a “nascent” recovery. Later today, economists polled by Bloomberg expect the Institute for Supply Management to say its manufacturing index declined to 58 last month from a January reading of 58.4. A figure higher than 50 signals expansion. Copper ‘Leading Indicator’ Oil prices also rose after a weekend earthquake in Chile disrupted supply of copper from the world’s biggest producer. Copper for three-month delivery on the London Metal Exchange surged as much as 5.6 percent to $7,600 a metric ton, the highest intraday price since Jan. 20. “Chile may be having some impact by lifting copper prices,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. “Copper is often seen as the leading indicator for the whole commodities sector.” Saudi Arabia, the world’s biggest crude exporter, agreed to increase crude supplies to India to 40 million metric tons a year, or about 770,000 barrels a day, from 25.5 million tons a year, during a meeting yesterday between Oil Minister Ali al- Naimi and his counterpart Murli Deora, India’s Oil Ministry said on its Web site. India is seeking to increase supply for refinery projects at Paradip, Bhatinda and Bina, the ministry said. The three new plants will increase India’s refining capacity of 178 million tons a year by almost 20 percent by the end of 2012. OPEC Producers Abu Dhabi National Oil Co., the United Arab Emirates’ state-run producer, yesterday deepened cuts in shipment volumes of Murban crude for April, citing OPEC limits on output. The Organization of Petroleum Exporting Countries increased crude-oil production to a 14-month high of 29.17 million barrels a day in February, according to a Feb. 26 Bloomberg News survey. Saudi Arabia led the gain, with output rising 100,000 barrels a day to 8.25 million. The group is scheduled to gather on March 17 in Vienna. “Obviously they aren’t as concerned about compliance when they’ve got the price where they want it,” said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne. “I wouldn’t expect any change in the targets when they meet but I’m sure the bigger producers will bang the table and say to tighten up compliance.” Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Feb. 23, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 85,352 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 16,916 contracts, or 25 percent, from a week earlier. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Ayesha Daya at adaya1@bloomberg.net

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