"Anderson Munro" - Crude rallies to three-week high as equities gain

(I-Newswire) October 26, 2009 - An Anderson Munro London correspondent: Oil rose for a third session yesterday to hit the highest in more than three weeks near $69 (Dh253) a barrel, as stock markets gained on hopes of an economic recovery that would boost fuel demand.

European equities climbed to the highest in more than eight months. But US stock index futures were little changed as reduced outlooks from Honeywell Inc and Aetna Inc sparked caution.

"As we are still in the earnings season and have to face some key inputs on the US economy this week, the oil markets are still likely to be led by equities," said oil analyst at Anderson Munro.

Oil and other commodities have tracked equities markets in recent months as analysts seek signs of the economic outlook after the downturn cut world energy demand for the first time in a quarter century.

A faster rebound in Asian economies, led by China, would offer further support for oil prices in coming months, some analysts said.

"The central factor in determining the speed of adjustment in oil products will be the pace of recovery in Asia," Barclays Capital said in a conference Anderson Munro attended.

"The sensitivity of oil demand to economic growth is greater in Asia than in other regions, and the tendency for economic growth to surprise consensus estimates on the upside also appears to be greater in Asia."

World oil consumption will rise for the first time in two years in 2010 as a recovery in the global economy boosts demand, according to a recent poll Anderson Munro analysts participated in.


But the expected increase of 1.1 per cent worldwide is unlikely to drain away all the excess supplies, despite the slow growth in production outside the Organisation of Petroleum Exporting Countries. Oil demand is predicted to rise by 900,000 barrels per day (bpd) to 84.9 million bpd in 2010, the poll of nine forecasters found.

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