Oil Rises as Global Stocks Rebound, OPEC Considers Meeting

By Mark Shenk

Oct. 28 (Bloomberg) -- Crude oil rose for the first time in three days as global stock markets rebounded and OPEC ministers said the group may meet again before December.

Oil advanced, tracking equities, as the MSCI World Index climbed, snapping a two-day, 8.4 percent drop. OPEC's secretary- general said the group may call a new meeting if prices fail to react to the 1.5 million-barrel-a-day production cut it announced last week.

``The oil-market fundamentals are taking a back seat to what's occurring in the financial markets,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``Global stock markets are up today, so the oil market is following.''


Crude oil for December delivery rose $1.29, or 2 percent, to $64.51 a barrel at 9:04 a.m. on the New York Mercantile Exchange. Futures touched $61.30 yesterday, the lowest since May 9, 2007. Prices, which have tumbled 56 percent since reaching a record $147.27 on July 11, are down 30 percent from a year ago.

``The equity markets are being looked at as an indication of future oil demand,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``The main driver of the market is demand destruction while any supply news, such as from OPEC, is being shrugged off.''

The Organization of Petroleum Exporting Countries' decision last week to trim production for the first time in almost two years failed to stop prices falling yesterday.

``If circumstances dictate we have another meeting, of course we will meet,'' OPEC 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.

Sign of Weakness

``The talk of another OPEC cut is being taken by the market as a sign of weakness,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``There are doubts that they can cut much more than 1.5 million to 2 million barrels a day. Compliance is going to be a big problem, given the desperation of some countries for cash.''

Brent crude oil for December settlement increased 83 cents, or 1.4 percent, to $62.24 a barrel on London's ICE Futures Europe exchange. Futures touched $59.02 yesterday, the lowest since Feb. 22, 2007.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.