PERTH (Reuters) - Oil rose over $1 to near $69 a barrel on Monday, reversing earlier losses of more than $1, as Asian stock markets climbed on signs of improvement in credit markets and the dollar steadied, stiffening investor confidence.
The euro was barely changed at $1.2749 against the U.S. dollar by early Asian trade, having lost about 9.6 percent in October, the single currency's worst monthly performance since its launch in 1999.
Analysts said traders would now be looking for signs that OPEC kingpin Saudi Arabia was cutting back its crude production, in line with the cartel's agreement last month to reduce output by 1.5 million barrels per day (bpd).
U.S. crude rose $1.12 to $68.93 a barrel by 11:23 p.m. ET, after falling as much as $1.13. London Brent crude was up $1.07 at $66.39.
"We're now seeing a more positive tide in stock markets, which is a good indication for crude oil markets and that's helping to stop the downward momentum in oil prices," said Toby Hassall, chief analyst at Commodities Warrants Australia.
"But the dominating theme continues to be a weak demand outlook, and despite the short-term price gains, we're not likely to see any real improvement to outlook in the near term."
Asian stocks rose on Monday, after Wall Street ended a turbulent October on a solid note.
Hong Kong's Hang Seng Index .HSI was up 5.4 percent, Singapore's Straits Times .FTSTI rose more than 4.0 percent, Australia's S&P/ASX 200 Index gained 3.0 percent, while South Korea's shares rose 2.2 percent. Japanese markets were closed for a holiday.
The dollar steadied after recording its biggest monthly gain in more than 17 years in October, with investors bracing for another round of interest rate cuts this week by the world's major central banks.
The European Central Bank, the Bank of England and the Reserve Bank of Australia are all set to lower rates to support their struggling economies against the threat of recession.
U.S. oil fell more than 32 percent in October, the steepest monthly decline ever as global demand slows.
In three months, oil has wiped out gains that took more than a year to build, down more than half since they struck a record of $147.27 a barrel in July, as a raft of poor economic data added pressure from weak demand reports in the U.S. and other key consumer nations.
OPEC members have no choice but to implement agreed output cuts and inform customers of the reductions if they want a stable oil price between $70 and $90 a barrel, OPEC President Chakib Khelil said on Sunday.
Khelil said Saudi Arabia was the key to the success of the reductions, and if the world's biggest oil exporter took its time over the operation the oil price could be affected.
Other OPEC members have begun to notify customers that they would reduce their crude oil sales in line with an OPEC decision to cut output.
Iran's oil minister said on Saturday it had informed customer France's Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) of an oil sales cut, while Kuwait has notified term customers in Asia it would reduce their crude oil supplies by 5 percent from November.
Earlier last week, Nigeria and the United Arab Emirates told customers they would receive less oil, but top exporter Saudi Arabia has yet to inform customers of any fresh curbs.
Oil's sharp downturn has spurred some OPEC members to call for additional supply reductions to arrest a continued slide in oil prices.
Iran's Oil Minister Gholamhossein Nozari said on Saturday that OPEC will cut output further, if needed, to achieve stability in the oil market, adding to comments by Venezuelan oil minister last week that OPEC should cut oil output by another 1 million bpd by December and should set a minimum price target of $70 or $80 a barrel.
Crude oil speculators on the New York Mercantile Exchange shifted to net short positions in the week October 28, the U.S. Commodity Futures Trading Commissions reported on Friday.
