crude tails equities higher, ignoring weak dem

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    NEW YORK (Dow Jones)--Crude futures rose with U.S. equities Thursday, ignoring a barrage of indicators pointing to weaker oil demand.

    Light, sweet crude for December delivery settled $2.08, or 3.7%, higher at $58.24 a barrel on the New York Mercantile Exchange. December Brent crude on the ICE futures exchange, which expired Thursday, settled down 38 cents, or 0.7%, at $51.99 a barrel.

    Crude futures have often traded in concert with the Dow Jones Industrial Average over the last two months, with equities treated as a window into the health of the wider economy, and therefore oil demand. On Thursday the Dow Jones Industrial Average crossed below 8,000 for the first time since Oct. 10, only to quickly rebound to recently trade above 8,500. Oil followed a similar trajectory, falling below $55 a barrel only to settle above $58.

    "Once stocks started showing some life, it spilled over to commodities as well," said Mike Zarembski, senior commodities analyst at optionsXpress, a brokerage in Chicago. "The markets definitely are correlated these days, I don't think there's any question about it."

    Equities provided support for oil prices on a day that began with a sharp downward revision by the International Energy Agency to the organization's 2008 and 2009 demand forecasts. The IEA now sees China requiring less oil next year than previously thought, where the fast-growing economy was previously seen helping to offset consumption declines across the developed world.

    U.S. demand for refined products is down 6.6% from a year earlier in the month ended Nov. 7, according to data released by the Department of Energy on Thursday. Government data also showed a surprisingly large 2-million-barrel build in gasoline inventories last week, even as refiners cut both runs and imports.

    "This build appears to highlight an exceptionally weak pace of demand...Gulf Coast refiners appear to be scrambling to reduce gasoline output," said Jim Ritterbusch, president of the trading advisory firm Ritterbusch & Assoc. in Galena, Ill.

    Declining demand and prices appears to have spurred the Arab members of the Organization of Petroleum Exporting Countries to open up their Nov. 29 meeting to the full group. OPEC has a meeting scheduled for Dec. 17 in Oran, Algeria, and could potentially announce a second production cut on top of the reduction of 1.5 million barrels a day agreed to in October.

    The November meeting is less likely to produce a cut, as Saudi Arabia, the world's largest exporter, has not signaled its support, wrote Greg Priddy, with Eurasia Group, a consultancy.

    "(The Saudis) also may want to wait for some evidence of a firming of demand or cold weather to provide support before they fire the last arrow in their quiver with the next round," Priddy wrote. "The most likely outcome at this point is that another round of cuts does materialize, but not until December."

    Front-month December reformulated gasoline blendstock, or RBOB, settled 5.43 cents, or 4.4%, higher at $1.3024 a gallon. December heating oil settled 3.96 cents, or 2.2%, higher at $1.8750 a gallon.

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