Oil scales 3 wk high on equities, gasoline

Oil rose toward $68 on Friday, scaling a fresh three week high, driven by rallies on global equity markets and gains in gasoline prices.

U.S. crude was 47 cents up at $67.63 a barrel by 0907 GMT, having hit $67.68 earlier, the highest intra-day price since July 2. The price is rising for the eighth trading day, on track for the longest rally so far this year.

London Brent crude was up by 55 cents at $69.80.

"The stock markets are as important as any oil fundamentals at the moment. I cannot see what is going to decouple equities and oil given the way they are working together now," said Tony Machacek, oil futures broker at Bache Financial.

"People will be keeping a close eye on stock markets to see if the upwards strength continues. The gains in the Dow are unbelievable."

On Thursday, Wall Street rallied on strong earnings reports from some major companies, with the Dow industrials rising above the key 9,000 mark for the first time since January. Firming stock markets point to economic recovery, which would lead to greater demand for energy.

Asian shares rose on Friday and European shares opened higher.

GASOLINE

Gains in crude oil prices have been also led by falling supplies of gasoline. U.S. refiners have been hit by a slew of unplanned outages, adding to deep run cuts enacted in reaction to weak profit margins and slumping U.S. demand for fuel under the weight of the recession.

Benchmark New York RBOB gasoline futures have risen more than 8 percent so far this week, surpassing an about 5 percent gain in crude oil prices, and its profit level, or crack, in relation to crude oil has also risen.

"The current support on crude oil is not only driven by exogenous markets, equities/the dollar index, but is as well supported by products cracks that are making strong gains on the back of refinery glitches and expected run cuts," Olivier Jakob with Petromatrix said.

European refiners have also kept their runs low to ease oversupply of middle distillates, such as heating oil, squeezing gasoline output.