Oil rises above $80 amid stock market surge

I / Singapore November 06, 2009, 10:52 IST

Oil prices rose above $80 a barrel today in Asia as crude investors eyed a surge in global stock markets.

Benchmark crude for December delivery was up 47 cents to $80.09 a barrel, at midday Singapore time, in electronic trading on the New York Mercantile Exchange. The contract fell 78 cents to settle at $79.62 on Thursday.

Oil traders often look to stock markets for a sense of overall investor sentiment, and the Dow Jones industrial average rose 2.1 per cent yesterday on better-than -expected jobless claims numbers and positive forecasts by Cisco Systems Inc. All major Asia indexes were also up in early today trading.

Crude investors are also watching signs in recent weeks of a drop in US oil supplies, which increased sharply this year as demand shrank. Some analysts forecast higher oil prices next year as the economy strengthens and demand recovers.

"We expect fundamentals to improve as oil demand growth resumes," Morgan Stanley said in a report. "Until the oil market tightens, oil will be dragged in the wake of other risky asset price moves."

Morgan Stanley said it expects oil to average $85 a barrel next year.