By Yee Kai Pin July 24 (Bloomberg) -- Crude oil pared losses after Asian equity markets rose for a ninth day, easing concern a recovery from the global recession will falter and delay a rebound in demand. Asian shares rose after South Korea’s economy grew 2.3 percent in the second quarter, the fastest pace in almost six years. Oil has increasingly moved in tandem with benchmark stock indexes as traders sought clues to the outlook for fuel demand. The Dow Jones Industrial Average and U.S. crude futures showed a correlation of 0.7 the past month, up from 0.06 in the month to Dec. 31, according to data compiled by Bloomberg. A correlation of 1 means oil and the equity index moved in lockstep. “The surge in oil prices has certainly been driven by equities,” said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. “Some of the corporate earnings from the U.S. were pretty good. There are still many to come.” Crude oil for September delivery traded at $67.08 a barrel on the New York Mercantile Exchange at 2:19 p.m. in Singapore, down 8 cents. The contract earlier fell as much as 1 percent to $66.46. Yesterday, it rose 2.7 percent to settle at $67.16, the highest since July 1, following a gain in U.S. home sales. Futures are up 5.4 percent this week. The MSCI Asia Pacific Index added 0.7 percent to 107.72 as of 1:18 p.m. in Tokyo and is poised for its best week in two months. The gauge is in its longest winning streak since August 2004 amid growing speculation the global economy is recovering. “A lot will depend on the stock markets today,” said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo. “The demand outlook is still uncertain.” Weak Fundamentals While the rally in equities has buoyed perceptions of the global economic outlook, analysts cautioned that near-term fundamentals in the oil market remained weak. U.S. gasoline and distillate fuel inventories climbed for a sixth week, the Energy Department said July 22, signaling demand in the world’s largest energy user has been slow to rebound. “With oil prices close to $70 but products inventories in the U.S. growing week on week, the risk of a price correction, as what we saw at the start of July, is growing,” Shum said. The Organization of Petroleum Exporting Countries will trim crude shipments by 1.7 percent in the four weeks ending Aug. 8, according to consultant Oil Movements, as refinery maintenance and faltering demand encourage members to implement supply cuts. OPEC, a 12-member group that pumps 40 percent of the world’s oil, will reduce seaborne exports in the four-week period to 22.39 million barrels a day from 22.78 million a day in the month ended July 11, the tanker-tracker said today. It’s the sixth consecutive drop reported in Oil Movements’ weekly reports. Brent crude for September settlement on London’s ICE Futures Europe exchange traded at $69.09 a barrel, up 9 cents, at 2:20 p.m. Singapore time. Earlier it dropped as much as 56 cents, or 0.8 percent, to $68.69 a barrel. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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