Jan. 25 (Bloomberg) — Crude oil rose above $75 a barrel as equities rebounded from the biggest three-day decline since March on signs that Ben S. Bernanke will be reconfirmed as Federal Reserve chairman.

Oil climbed as much as 1.2 percent and stocks rallied after the White House and the Senate’s senior Republican predicted Bernanke will keep his job. Oil also increased after failing to breach technical support at about $74 a barrel amid speculation that last week’s slide was overdone.

“Stock market optimism is driving us up a bit,” said Phil Flynn, vice president of research at PFGBest in Chicago. “There was a lot of support at around $74, and with the stock market higher, traders weren’t confident enough to take that out.”

Crude for March delivery rose 68 cents, or 0.9 percent, to $75.22 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures have fallen 10 percent in the past two weeks from a 15-month high of $83.95 a barrel. Oil has risen 62 percent in the past year.

Oil earlier touched $74.06 a barrel, near a one-month low of $74.01, as the dollar strengthened against the euro, curbing the appeal of commodities as an alternate investment.

President Barack Obama “is very confident” that the Senate will confirm Bernanke, David Axelrod, a senior White House adviser, said on CNN television. Senate Republican leader Mitch McConnell said on NBC’s “Meet the Press” that Bernanke will have “bipartisan support in the Senate” even as a number of his party are opposed.

S&P 500

The Standard & Poor’s 500 Index advanced 0.9 percent to 1,100.99 at 2:29 p.m. in New York. The S&P 500 is up 63 percent since March 9 as governments worldwide pledged more than $12 trillion to revive the economy. The Dow Jones Industrial Average gained 64.09 points, or 0.6 percent, to 10,237.07.

Oil prices will rise to $95 a barrel by the end of the year as demand recovers, Morgan Stanley said in a report today by commodities analyst Hussein Allidina. Declining crude inventories and the improving economy will boost prices this year and take them to an average $100 a barrel in 2011, according to the report.

Also bolstering prices was a weekend tanker collision that shut the Sabine Neches Waterway, the Texas ship channel serving four refineries with 6.5 percent of U.S. capacity.

The waterway will reopen by week’s end, by “a conservative estimate,” said Lionel Bryant, chief warrant officer for the U.S. Coast Guard in Port Arthur, Texas, in a telephone interview today.

Fifteen skimming vessels are working to recover about 11,000 barrels of oil that spilled after a towing craft slammed into the 807-foot Eagle Otome on Jan. 23, according to a statement from the agency yesterday.

Exxon Refinery

The tanker was bound for Exxon Mobil Corp.’s Beaumont refinery when the collision happened, Commander John Lovejoy said in a telephone interview yesterday. The vessel is owned by AET Tankers of Malaysia, the Coast Guard said.

Exxon’s Beaumont plant is one of four refineries located near the waterway. The other three are operated by Royal Dutch Shell Plc’s Motiva Enterprises, Valero Energy Corp. and Total SA. The four plants have a combined processing capacity of 1.15 million barrels of oil a day.

“The longer it takes to clean it up and the longer it takes for refineries to come back to par, the more bullish it is,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “It’s kind of a wait-and-see here.”

U.S. crude-oil inventories probably rose last week as imports gained and refineries shut units, a Bloomberg News survey of analysts showed.

Stockpiles climbed 1.5 million barrels in the week ended Jan. 22 from 330.6 million the prior week, according to the median of 11 estimates before an Energy Department report this week. Nine of the respondents forecast and increase, and two said there was a decline.

OPEC Compliance

OPEC nations must improve their compliance with the group’s output quotas to prevent further pressure on oil prices, Shokri Ghanem, chairman of Libya’s National Oil Corp., said yesterday. He said futures will be between $75 and $85 a barrel in 2010.

“The market will see fluctuations in 2010 not because of supply and demand but because of speculation,” he said in a telephone interview yesterday from Tripoli.

Hedge-fund managers and other large speculators reduced their bets on rising oil prices for the first time in five weeks, according to U.S. Commodity Futures Trading Commission data.

Speculative net long positions, the difference between orders to buy and sell the commodity, fell 1 percent to 134,381 contracts in the week ended Jan. 19, the U.S. Commodity Futures Trading Commission said last week. Positions a week earlier were the highest in at least 27 years.

Output by the Organization of Petroleum Exporting Countries grew 4.7 percent to 28.965 million barrels in the past nine months of 2009 as oil rose 60 percent to $79.36 a barrel, according to data compiled by Bloomberg.

Brent oil for March settlement increased 84 cents, or 1.2 percent, to $73.67 a barrel on the London-based ICE Futures Europe exchange.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

Last Updated: January 25, 2010 14:52 EST