Crude Oil Rises in New York, Rebounding From Below $60 a Barrel

By Christian Schmollinger

Nov. 7 (Bloomberg) -- Crude oil rose in New York, rebounding from a 19-month low, as traders bought back contracts to benefit from earlier bets on falling prices.

Oil bounced back up after falling below $60 a barrel for the first time since March 2007, prompting traders to close out so- called short positions, or bets that prices would fall. Traders dealt 752 contracts in the five minutes around when crude prices dropped to $59.97 a barrel compared with 1,040 the prior hour.

``Sixty dollars is a significant figure because for the last two years that's been the bottom,'' said Clarence Chu, an options trader at Hudson Capital Energy in Singapore. ``If I were short that's where I would buy back.''

Oil for December delivery climbed as much as 78 cents, or 1.3 percent, to $61.55 a barrel on the New York Mercantile Exchange. It was at $61.14 a barrel at 3:21 p.m. Singapore time.

The contract earlier fell to $59.97 a barrel, the lowest since March 22, 2007.

Brent crude oil for December settlement rose as much as 62 cents, or 1.1 percent, to $58.05 a barrel on London's ICE Futures Europe exchange. It was at $57.67 at 3:21 p.m. Singapore time.

The contract earlier fell as much as 81 cents, or 1.4 percent, to $56.62 a barrel. It dropped $4.44, or 7.2 percent, to $57.43 a barrel yesterday, the lowest since Feb. 14, 2007.

Oil has plunged 9.3 percent this week on reports the U.S. has shed jobs, reinforcing concerns the country has entered a recession that will limit gasoline and diesel fuel consumption. Employers in the U.S., the world's biggest oil user, likely eliminated 200,000 jobs in October, the 10th consecutive month of cuts, a government report out later today may show.

`Demand Focus'

``The focus hasn't shifted from demand and that remains a weight that oil and commodities have had a difficult time throwing off,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``If you're looking for a short-term downside risk to the oil price, then that jobs number is it.''

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 over the period was down 2.3 percent at 9 million barrels a day.

The number of Americans filing first-time unemployment benefits rose to the highest since 1983, a Labor Department report showed yesterday. Companies in the U.S. cut an estimated 157,000 jobs in October, the most in almost six years, a private report by ADP Employer Services based on payroll data said Nov. 5.

Crude oil may rise next week on speculation prices have fallen too far, too fast since touching a record in July, and on signs that interest-rate cuts may bolster fuel demand.

Twelve of 26 analysts surveyed by Bloomberg News, or 46 percent, said prices will increase through Nov. 14. Nine respondents, or 35 percent, said oil will decline and five forecast markets will be little changed. Last week 57 percent expected futures to increase.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.