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Oil rises above USD 64 as stock markets rally

LONDON - Oil rose above USD 64 on Tuesday, tracking a recovery in European and Asian stock markets as dealers returned to buy beaten-down shares.

Traders were also watching closely for any evidence OPEC was implementing its decision last week to cut output.

Officials from the Organization of the Petroleum Exporting Countries said they would consider further reductions unless the oil market strengthened. U.S. light crude for December delivery rose USD 1.19 to USD 64.41. London Brent crude gained 78 cents to USD 62.19. European equities rose on Tuesday, helped by a late surge in Asia and a jump in shares of heavyweight oil group BP after its third-quarter earnings beat forecasts.

The credit crisis, which began with failing U.S. mortgages, has widened into a worldwide rout as investors have dumped stocks and commodities, shunned higher-risk emerging markets and sought out the safest government bonds and currencies.

Global economic turmoil has already had a major impact on fuel consumption and some analysts have predicted USD 50 a barrel - widely seen as the cash cost of production for many newer oil projects - is possible in the short term. U.S. crude has already dropped by nearly 60 percent from a record above USD147 a barrel in July to a low of USD 61.30 on Monday, its weakest for 17 months. OPEC's announcement last week it would cut output by 1.5 million barrels per day has done little yet to stem oil's fall.

 

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