Crude Oil Rises From Three-Month Low as Global Equities Gain:

Crude oil rose from a three-month low in New York on speculation U.S. regulators' efforts to support financial companies will limit the impact of the nation's slowing economic growth on global energy demand. Asian stocks advanced for a second day with the MSCI Asia Pacific Index climbing 2.6 percent. Shares in the U.S., the world's biggest oil user, gained for the first time in six days yesterday on a plan to bail out bond insurers. Oil also climbed on speculation its 13 percent decline from this month's record has fairly priced the commodity for slower U.S. demand growth. ``The gain is a bit of a delayed reaction to the positive performance of the financial markets,'' said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. ``Asian markets are up today so that is having a knock-on effect in the crude market.'' Crude oil for March delivery rose as much as $1.05, or 1.2 percent, to $88.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $87.75 at 1:34 p.m. in Singapore. The contract fell 2.5 percent to $86.99 yesterday, the lowest close in three months. It earlier traded as low as $86.65. Prices gained almost a dollar post-settlement, reflecting a late rally in U.S. stock prices. The equity rally ``will ease up concern about softening demand right now,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``After hitting $100, $87 may seem like fair value if the demand picture remains reasonably constant.'' Rate Cut Brent crude for March settlement climbed as much as 88 cents, or 1 percent, to $87.50 a barrel on London's ICE Futures Europe exchange. It was at $87.41 at 1:28 p.m. Singapore time. The contract yesterday fell $1.83, or 2.1 percent, to $86.62 a barrel, the lowest close since Oct. 24. Futures reached a record $98.50 on Jan. 3. The U.S. consumes about a quarter of global oil output. The Federal Reserve cut its benchmark lending rate by three-quarters of a percentage point to 3.5 percent on Jan. 22, citing increasing risks to the nation's economic growth. It was the first emergency move since the Sept. 11, 2001, terrorist attacks. Investors are expecting another rate cut when the central bank meets again on Jan. 30, Altavest's Hartmann said. With no major economic data this week, oil will likely take its direction from the performance of equity markets and today's inventory report from the U.S. Energy Department. ``Unless there's a big surprise in the stock levels, the key focus will be on the demand'' numbers, he said. ``If the support at $86 holds, and the equity markets come back a little bit more, we could see oil bounce back into the mid-$90 range.'' Inventories U.S. crude-oil stockpiles probably rose for a second week, gaining 1.5 million barrels at Jan. 18, based on the median estimate from a survey of 16 analysts. Gasoline supplies probably climbed 1.4 million barrels last week, the 11th straight increase, even as refining rates were unchanged. Refineries operated at 87.1 percent of capacity, unchanged from the week before, according to the survey. Refinery operating rates plunged 4.2 percentage points in the week ended Jan. 11. ``The margins for the refiners are decreasing so they are adjusting their output of products,'' said Hirofumi Kawachi, senior energy economist at Mizuho Investors Securities Co. in Tokyo. ``That means we'll see an increase in crude oil inventories.'' OPEC Output U.S. fuel demand, based on deliveries from refineries and terminals, fell in each of the department's three previous reports. Daily use reached an 11-week low of 20.5 million barrels the week ended Jan. 11. U.S. demand usually eases at the start of the second- quarter as heating consumption wanes and before summer vacation driving increases gasoline use. Rising stockpiles may mean the motor-fuel won't provide the support for oil that it has in recent years, Altavest's Hartmann said. ``I don't actually think we'll see prices move lower than $80,'' he said. ``There is no recession at this point. This isn't a consumer-led softening of the economy'' and there are still risks to supply from Nigeria and the Middle East, he said. The Organization of Petroleum Exporting Countries doesn't need to raise its output at its Feb. 1 meeting because recent declines in prices show there is enough supply, Reuters reported, citing Abdullah bin Hamad al-Attiyah, Qatar's oil minister. ``The price drop over the last few days shows (the market) is very balanced,'' al-Attiyah said while attending the World Economic Forum in Davos, Switzerland, according to Reuters