By Christian Schmollinger
Oct. 29 (Bloomberg) -- Crude oil rose for the first time in four days after U.S. and Asian stocks surged and OPEC said it may meet again before December to consider a second cut in production in as many months.
Asian stock markets gained amid speculation Japan, the world's second-largest economy, will reduce interest rates. OPEC will ``probably'' lower quotas to avoid inventory growth, Venezuela's Oil Minister Rafael Ramirez said. Oil also gained as the Financial Times cited an International Energy Agency draft report saying global crude output is falling faster than expected.
``To the extent that a lift in the equity markets implies an easing in concerns in the economic outcome, that's supportive for oil prices,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``If OPEC adheres to their cuts that implies the market should tighten up a bit.''
Crude oil for December delivery climbed as much as $3.98, or 6.3 percent, to $66.71 a barrel on the New York Mercantile Exchange. It was at $64.84 a barrel at 3:45 p.m. Singapore time. Prices reached a record $147.27 on July 11.
Yesterday, futures fell 49 cents, or 0.8 percent, to $62.73 a barrel, the lowest close since May 16, 2007, after a Conference Board report showed the lowest confidence reading since records began in 1967.
U.S. equities rallied as the cheapest valuations in 23 years lured investors and increased commercial-paper sales signaled credit markets are thawing. The Dow Jones Industrial Average posted its second-best points gain in 23 years, climbing 889.35, or 11 percent, to 9,065.12. The MSCI Asia Pacific Index gained 3.7 percent as of 3:13 p.m. in Tokyo.
Supply Declines
``People are looking for any sign of a recovery in demand,'' said Tetsu Emori, a fund manager with Astmax Ltd. in Tokyo, Japan's biggest commodities asset manager. ``Last night's S&P gain was very positive so it's easy for people to latch onto that story and push the price higher.''
Global oil output is falling faster than expected, leaving producers struggling to meet demand without extra investment, the Financial Times said, citing a draft of an IEA report.
Annual production is set to drop by 9.1 percent in the absence of additional investment, according to the draft of the agency's World Energy Outlook obtained by the newspaper, the FT reported. Even with investment, output will slide by 6.4 percent a year, it said.
The shortfall will become more acute as prices fall and investment decisions are delayed, the newspaper said. The IEA forecasts that the rising consumption of China, India and other developing nations requires investments of $360 billion a year until 2030, it said.
OPEC May Cut
The Organization of Petroleum Exporting Countries' secretary-general said yesterday the group may call a new meeting if prices, down 56 percent from July's peak, fail to react to last week's 1.5 million-barrel-a-day output reduction.
``If circumstances dictate we have another meeting, of course we will meet,'' Secretary-General Abdalla el-Badri said at the Oil & Money conference in London. He said he expects a market response to last week's output cut after about a week.
Shokri Ghanem, chairman of Libya's National Oil Corp., echoed el-Badri's comments, saying he's watching the market to see whether it's deteriorating or stabilizing.
The U.S. Energy Department will probably report today that U.S. supplies of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose last week, a Bloomberg News survey showed.
Brent crude oil for December settlement rose as much as $3.90, or 6.5 percent, to $64.19 a barrel on London's ICE Futures Europe exchange. It was at $62.27 a barrel at 3:45 p.m. Singapore time. The contract yesterday dropped $1.12, or 1.8 percent, to settle at $60.29 a barrel, the lowest settlement since March 20, 2007.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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