Crude Oil Rebounds From a 19-Month Low as Equity Markets Gain

By Grant Smith

Nov. 7 (Bloomberg) -- Crude oil rose from a 19-month low in New York as rising stock indexes allayed concern about waning energy demand.

Oil prices may rise next week, according to a Bloomberg News survey of analysts, as traders view the plunge in crude prices to below $60 a barrel as excessive. Equity markets in Europe and U.S. index futures recovered on speculation that interest rate cuts will reverse an economic slowdown.

``Oil in the last two or three weeks has followed equity markets a lot,'' said Gerrit Zambo, an oil trader at BayernLB in Munich. ``That's certainly a reason why crude hasn't held below $60.''

Oil for December delivery climbed as much as $2.05, or 3.4 percent, to $62.82 a barrel on the New York Mercantile Exchange. It was at $62.31 a barrel at 1 p.m. London time. The contract earlier fell to $59.97 a barrel, the lowest since March 22, 2007, and is heading for an 8.5 percent decline this week.

Brent crude oil for December settlement rose as much as $2, or 3.5 percent, to $59.43 a barrel on London's ICE Futures Europe exchange. It was at $59.01 at 1 p.m. London time.

U.S. fuel demand during the past four weeks averaged 19.1 million barrels a day, down 6.7 percent from a year ago, the Energy Department reported Nov. 5. Gasoline consumption in the period was down 2.3 percent at 9 million barrels a day.

IMF Forecasts

The International Monetary Fund projects the economies of the U.S., Japan and euro zone will shrink next year, in a simultaneous decline in the world's biggest industrial powers, according to a fund staffer who cited revised forecasts.

``There's been a major change in sentiment since the IMF report,'' said Neil Atkinson, an analyst with KBC Market Services in London. ``Before the report prices were going in the right direction for OPEC, and it seemed that their December meeting would be a watching brief.''

The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world's crude, is due to meet on Dec. 17. Most of its 13 members have announced that they will implement an Oct. 24 resolution to slash output by 1.5 million barrels a day.

Europe's Dow Jones Stoxx 600 Index added 0.8 percent to 217.08 at 12:22 p.m. in London, leaving the index down 2.2 percent this week. Standard & Poor's 500 Index futures climbed 1.2 percent as Wal-Mart Stores Inc., the world's biggest retailer, rose.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net