Crude Oil Rises From a Seven-Week Low After Equities Recover

By Grant Smith and Christian Schmollinger

Feb. 13 (Bloomberg) -- Crude oil rose in New York, paring the worst weekly decline since December, after equities gained on speculation governments will widen efforts to help consumers weather a deepening global recession.

Oil climbed as much as 2.8 percent as stocks in Europe and Asia advanced, sending the MSCI World Index higher for the first time in four days. U.S. index futures climbed. China’s economy may expand 6.6 percent in the second quarter after slowing to 6.3 percent in the three months to March 31, according to a Bloomberg survey.

“Equities are lending some support to oil,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “It may be there’s some optimism coming back into the market from the stimulus package, and a feeling that markets came down too far.”

Crude for March delivery rose as much as 96 cents to $34.94 a barrel on the New York Mercantile Exchange. It was at $34.77 a barrel at 1:15 p.m. London time. Yesterday, futures fell $1.96, or 5.5 percent, to $33.98, the lowest settlement since Dec. 19.

The contract is heading for a 14 percent decline this week, the steepest since the week ended Dec. 19.

The MSCI World Index added 0.8 percent to 843.98 at 11:51 a.m. in London. The gauge of 23 developed markets has lost 2.9 percent this week.

Cushing Inventories

The discount of the March West Texas Intermediate contract, the grade that’s traded in New York, to London’s Brent futures contract nearest expiry widened to a record $11.48 a barrel today after supplies rose at Cushing, Oklahoma.

Supplies at Cushing, where WTI is stored, climbed 1.7 percent to 34.9 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location.

Brent crude for April settlement was at $45.41 a barrel, 62 cents or 1.4 percent lower, on the ICE Futures Europe exchange at 1:19 p.m. London time.

OPEC lowered its estimate for 2009 worldwide oil demand this year by 530,000 barrels a day to 85.13 million barrels a day, the producer group said in a monthly report today. That means demand will contract by 580,000 barrels a day this year, or 0.7 percent. Last month it forecast a decline of 0.2 percent.

“The deterioration in the world economy has led to a significant reduction in global oil consumption,” the report from OPEC’s Vienna-based secretariat said. “The sudden and massive erosion in demand has helped push crude oil inventories up sharply.”

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