Crude oil rose the most in almost two weeks in New York as reports signaled a strengthening Chinese economy and the dollar retreated against major currencies.

Oil jumped 3.3 percent after China’s May exports grew about 50 percent from a year earlier, according to Reuters. The dollar fell amid speculation the European Central Bank may act to stabilize the region’s debt markets. U.S. oil supplies dropped to the lowest level since April in a government report.

“China is trying to slow down their economy, but their export numbers came out much bigger than expected,” said Andre Julian, chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “The dollar is down, and that’s going to help push crude up.”

Crude oil for July delivery rose $2.39 to settle at $74.38 a barrel on the New York Mercantile Exchange, the biggest advance since May 27. Futures have risen 6.2 percent in the past year.

Oil futures have traded between $64.24 and $87.15 a barrel since May 3.

“The market’s in a congestive range, and traders are trying to decide whether or not they they’re going to try to make another run toward $90 or try to push this thing below $60,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, in an interview on Bloomberg Radio. “We should know in the next couple of weeks.”

Weaker Dollar

The dollar index, which measures the U.S. currency against six trading partners, dropped 0.6 percent to 87.909 at 3:30 p.m. in New York. A weak dollar boosts the appeal of commodities as an alternative investment.

Economists surveyed by Bloomberg forecast the European Central Bank, which meets tomorrow, will leave its key interest rate at a record low until the second quarter of 2011.

The Reuters/Jefferies CRB Index of 19 commodities advanced 1.2 percent to 253.06, the third consecutive increase. Thirteen of the commodities increased, led by aluminum and crude.

“We’ve had a substantial pullback in the dollar in the past two days,” said Rich Ilczyszyn, a senior market strategist with broker Lind-Waldock in Chicago. “It’s more the currency effect today rather than supply and demand.”

Bernanke Comments

The Standard & Poor’s 500 Index gained as much as 1.5 percent as stocks advanced on the Chinese exports and after Federal Reserve Chairman Ben S. Bernanke said the central bank will act as needed to aid the economic recovery. The index erased its gains after the oil market settled on a Fed report saying economic growth was subdued.

The S&P 500 fell 0.6 percent to 1,055.69, and the Dow Jones Industrial Average lost 40.73 points, or 0.4 percent, to 9,899.25.

The United Nations Security Council voted today to impose new sanctions on Iran, OPEC’s second-largest oil producer, that restrict financial transactions, tighten an arms embargo and authorize the seizure of cargo linked to its nuclear or missile programs.

“The question is whether Iran will retaliate in some way,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut, before the vote. Iran pumped about 3.81 million barrels of oil a day last month, according to Bloomberg estimates.

Nuclear Program

The UN’s move, aimed at blocking Iran’s ability to develop nuclear weapons and pressuring the country to join international talks, is “incorrect,” won’t resolve the dispute and will only make the situation more complex, Ramin Mehmanparast, a Foreign Ministry spokesman, said today in a telephone interview in Tehran.

Iran says its nuclear development work is intended for energy production.

The Organization of Petroleum Exporting Countries said in its monthly report today it will need to pump less crude than previously thought this year as output from non-OPEC countries increases more than forecast.

The group, which produces about 40 percent of the world’s oil, estimated members will need to pump 28.77 million barrels of oil a day to satisfy demand for the year, according to its monthly oil report. That’s about 70,000 less than last month’s projection.

OPEC left its forecast for world oil demand in 2010 at 85.37 million barrels a day, unchanged from the May estimate. The Energy Department cut its outlook for 2010 global oil consumption yesterday to 85.51 million barrels a day from 85.55 million last month. The Paris-based International Energy Agency will publish its outlook tomorrow.

Brent Crude

Brent crude for July delivery gained $1.97, or 2.7 percent, to $74.27 a barrel on the ICE Futures Europe exchange in London.

Oil on the Nymex rose to a premium to Brent crude for the first time since April 9.

Oil volume in electronic trading on the Nymex was 644,393 contracts as of 2:27 p.m. in New York. Volume totaled 844,996 contracts yesterday, 9.3 percent above the average of the past three months. Open interest was 1.32 million contracts.

--With assistance from Bill Varner, Ken Prewitt and David Wilson in New York and Ladane Nasseri in Tehran. Editors: Joe Link, Bill Banker

To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net; Paul Burkhardt in New York at pburkhardt@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Sourced from www.businessweek.com