* Asian stock markets follow Wall Street higher
* Dollar steady, holds near four-month lows
* World oil demand to fall at fastest rate since 1981 - IEA
By Chua Baizhen
SINGAPORE, May 15 (Reuters) - Oil prices paused below $59
on Friday as investors weighed stronger equities, a steady
dollar and a gloomy demand forecast by the International Energy
Agency.
Crude prices were just a notch higher from last week's
close, after moving in lockstep with the stock market and
rising against a bearish report by the IEA a day earlier.
U.S. crude for June delivery <CLc1> inched up 9 cents to
$58.71 a barrel at 0246 GMT, while London Brent for July
delivery <LCOc1> rose 12 cents to $58.71 in its first session
of trade as the new front-month contract.
"Equities and currency are most important. The $60 price
level is also very important," Tetsu Emori, a fund manager at
Tokyo-based Astmax Co Ltd, said.
U.S. oil prices breached $60 a barrel during intraday
trading on Tuesday but settled below $59 after the U.S.
Department of Energy slashed its 2009 oil demand forecast.
Oil prices have been tracking equities markets in recent
months as traders look to stocks for signs of an economic
recovery that could lift ailing world fuel demand.
Tokyo's Nikkei average <> was up 1.66 percent by the
midday trading break after Wall Street closed firmer on
Thursday, while the dollar was steady against a basket of major
currencies <.DXY>. [][]
Paris-based IEA, an adviser to 28 industrialized nations on
energy policy, forecast a day earlier that world oil demand
this year would fall the most since 1981. []
IEA said the rise in oil prices to a six-month high above
$60 this week was due to sentiment rather than fundamentals.
The U.S. Energy Information Administration and OPEC also
cut their forecasts for energy demand in recent days.
"I don't expect oil demand to recover any time soon,"
Astmax's Emori said.
The Organization of the Petroleum Exporting Countries
(OPEC), which has announced 4.2 million bpd of production cuts
since September in a bid to tighten the market, also pumped
more oil last month than in March, the IEA said.
OPEC members' compliance with production quotas fell to 78
percent in April from 83 percent a month earlier.
Traders will take cues from more economic indicators out of
the United States due later in the day, as well as renewed
unrest in Nigeria, Africa's biggest oil producer.
Nigerian militants have hijacked two cargo ships in the
Niger Delta and given oil companies until Saturday to evacuate
staff, warning they would attack helicopters and planes after
the deadline, after heavy clashes with the military.
[]
Economic data expected later include U.S. April consumer
price index, the Reuters/University of Michigan survey of May
consumer sentiment, the U.S. ECRI weekly index of economic
activity, as well as euro zone flash first-quarter GDP.
(Editing by Ben Tan)
