Crude Oil Rises From 13-Month Low on European Bank Rescue Plan

By Gavin Evans

Oct. 13 (Bloomberg) -- Crude oil rose from a 13-month low in New York on speculation action by European leaders to prevent the region's major lenders from collapsing may help slow credit market turmoil that threatens to stall the global economy.

Oil gained for the first time in four days after the 15 nations using the euro agreed to shore up their banks, measures which will include the U.K. buying controlling stakes in Royal Bank of Scotland Plc and HBOS Plc. Iran, the world's fourth- biggest oil producer, will next month ask OPEC to cut output to reflect falling demand, Tehran-based newspaper Pool reported.

``Everybody is waiting to see evidence that these government interventions are having a positive influence, or are at least dampening the global panic,'' said Toby Hassall, research analyst with Commodity Warrants Australia Pty in Sydney. ``The sentiment in the market is still very poor.''

Crude oil for November delivery rose as much as $3.37, or 4.3 percent, to $81.07 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $80.83 at 8:38 a.m. in Singapore.

The contract fell $8.89, or 10.3 percent, to $77.70 a barrel on Oct. 10, the lowest settlement since Sept. 10, 2007. Prices rallied post-settlement as U.S. equity prices climbed from five-year lows late in the session.

New York oil futures dropped 17 percent last week, the biggest one-week decline since the U.S.-led invasion of Iraq in March 2003. Copper, nickel and aluminum also dropped as world equity markets plunged and the International Monetary Fund warned the world was on the cusp of recession.

`Reasonably Priced'

Oil ``looks pretty fair and reasonably priced at the moment,'' Commodity Warrants' Hassall said. ``Markets are pricing in a global slowdown, if not a full-blown recession.''

Brent crude oil for November settlement rose $2.41, or 3.3 percent, to $76.50 a barrel on London's ICE Futures Europe Exchange. The contract slumped $8.57, or 10 percent, to $74.09 on Oct. 10, the lowest settlement since Sept. 4, 2007. The contract dropped 18 percent last week.

The International Energy Agency, an adviser to 28 nations, on Oct. 10 cut its forecast for global oil demand for 2008 to 0.5 percent, the lowest since 1993. Demand next year will rise by 700,000 barrels a day to 87.2 million, 440,000 barrels fewer than the Paris-based agency projected a month earlier.

Oil fell from a record $147.27 in New York in July as demand expectations deteriorated and the weaker outlook in Europe and Asia lifted the dollar, reducing the appeal of commodities priced in the U.S. currency.

Euro's Gains

The euro jumped the most in three weeks against the dollar today on the region's bank rescue plan and was another support for oil, Hassall said. Investors would now be looking for signs that confidence is returning to global markets, he said.

``We'll need a little bit of clear evidence that the falls in equity markets are finished before we'll see any real strong bounce in commodity prices, Hassall said.

S&P 500 futures expiring in December added 37.40 points, or 4.2 percent, to 928.40 as of 9 a.m. in Tokyo after the index slid 18 percent last week, its worst drop since 1933. Australia's S&P/ASX 200 Index rose 5.5 percent to 4,180.10 after dropping 16 percent last week.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net