BLBG: Oil Rises From 3-Year Low as Equities Gain, Traders Close Out
By Christian Schmollinger
Dec. 3 (Bloomberg) -- Crude oil rebounded from the lowest price in more than three years as equities gained and traders bought contracts to close out bets that prices will fall.
Asian stocks rose for the first time in three days, following gains on Wall Street, as central banks took steps to contain the global recession with the Federal Reserve extending an emergency loan program and the Bank of Japan easing terms on lending to banks. The U.S. has been in a recession since December 2007, the National Bureau of Economic Research said Dec. 1.
``It's still a case of the oil market looking to equities for some gauge as to how the global demand outlook is appearing,'' said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. ``The recession call was seen as a negative for the market on Monday, but that possibly suggests that we're closer to coming out of the recession than people are thinking, and that could be seen as a positive.''
Crude oil for January delivery rose as much as $1.14, or 2.4 percent, to $48.10 a barrel in after-hours electronic trading on the New York Mercantile Exchange, and traded at $47.75 a barrel at 1:09 p.m. Singapore time.
Yesterday, futures fell $2.32, or 4.7 percent, to $46.96 a barrel, the lowest settlement since May 20, 2005. Oil has tumbled 67 percent from a record $147.27 a barrel reached on July 11. Oil is set to decline 50 percent this year, snapping six years of gains.
U.S. gasoline purchases last week rose from the previous week by 1.7 percent, MasterCard Inc. said in its SpendingPulse report. That is still down 0.3 percent from the same period a year ago.
`Short-Covering'
``The rise now is just short-covering,'' said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. ``Even though prices have been falling, demand for gasoline and products is bottoming out and even increasing a little bit.''
Fuel demand has dropped as the U.S., European and Japanese economies slowed.
The U.S. is facing its longest economic slump since World War II, said the National Bureau of Economic Research, a private non-profit group of economists based in Cambridge, Massachusetts.
``The demand isn't going to get any stronger in the near- term,'' said Commodity Warrants Hassall. ``We have to get a sense of how deep the recession is going to be in the U.S.''
U.S. crude inventories probably gained for a 10th week as demand continues to plummet in the world's largest energy user, according to a Bloomberg survey before the Department of Energy releases its weekly report.
A U.S. Energy Department report today will show that crude-oil supplies rose 1 million barrels last week, according to the median of 13 responses in a Bloomberg News survey. It would be the 10th consecutive weekly gain. Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, also rose, according to the survey.
Brent crude oil for January settlement gained as much as $1.15, or 2.5 percent, to $46.59 a barrel on London's ICE Futures Europe exchange. It was at $46.32 a barrel at 12:54 p.m. Singapore time. The contract declined $2.53, or 5.3 percent, to $45.44 a barrel yesterday, the lowest settlement since Feb. 15, 2005.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
