Repsol YPF SA advanced in Madrid trading on reports that OAO Lukoil is in talks to acquire a stake of just under 30 percent in Spain's largest oil company. Repsol gained as much as 2.2 percent and traded up 30 cents at 14.25 euros as of 9:13 a.m. local time. The stock outperformed the Dow Jones Europe Stoxx Oil & Gas Index, which fell 1.5 percent. Lukoil may purchase Sacyr's 20 percent stake in Repsol and an additional 9.9 percent of its shares on the open market, EFE reported yesterday, citing people it didn't identify. Lukoil would be required to make an offer for the whole company if it bought more than 30 percent, EFE said.

The overall stake would be worth 5.1 billion euros ($6.37 billion) if taken as a direct percent of the Spanish oil company's market value of 17 billion euros as of Nov. 19.

Sacyr, Spain's worst-performing stock this year, increased 3.9 percent to 6.75 euros in Madrid.

Dmitry Dolgov, a spokesman for Lukoil, Russia's biggest non-state oil producer, declined to comment. Nobody from Repsol was immediately available for comment.

Sacyr remains open to discussions on any of its assets, a Sacyr spokeswoman, who asked not to be identified in line with company policy, said today by telephone.

Repsol operates five refineries in Spain, three in Argentina and one in Peru. The energy company has holdings in another refinery in Argentina and two in Brazil, giving the company a total refining capacity of 1.23 million barrels a day, according to the Madrid-based company's Web site.

Italian Refinery
In June, Lukoil agreed to pay Italy's ERG SpA 1.35 billion euros for 49 percent in a new venture that will control the 320,000 barrel a day Isab refinery, storage tanks, and a 99- megawatt power plant in Priolo, Sicily. The Russian company also has refineries in Bulgaria and Romania.

OAO Gazprom, Russia's natural-gas exporter, said Nov. 14 that it's not interested in a 20 percent stake in Repsol. Spain's government is opposed to state-run foreign companies buying into its strategic industries, Deputy Prime Minister Maria Teresa Fernandez de la Vega said earlier the same day.

The Spanish government wouldn't stand in the way of a Lukoil bid for 29.9 percent of Repsol, Cinco Dias reported today. The administration would prefer Lukoil, rather than Total SA of France, purchase the stake, the Spanish newspaper said, without saying how it got the information.

Crude oil fell for a fifth day, approaching $50 a barrel, as the contracting world economy increases concerns that demand for fuels will slow.

U.S. fuel use during the past four weeks averaged 19.1 million barrels a day, down 7 percent from a year ago, an Energy Department report said yesterday. Equities declined with the MSCI Asia Pacific Index dropping for a fourth day while the Dow Jones Industrial Average yesterday fell to the lowest since March 2003.

``The big picture remains one of weak demand, economic concerns and a falling market,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York, in an interview with Bloomberg Television. ``U.S. demand has really been collapsing and dragging the OECD demand as well and we might end up with a contraction in global demand growth for the year.''

Crude oil for December delivery fell as much as 97 cents, or 1.8 percent, to $52.65 a barrel on the New York Mercantile Exchange. It was at $52.75 a barrel at 2:36 p.m. Singapore time. Yesterday, futures touched $52.79 a barrel, the lowest since Jan. 23, 2007.

Oil has dropped 64 percent since reaching a record $147.27 a barrel on July 11. Yesterday, December futures fell 77 cents, or 1.4 percent, to $53.62 a barrel, the lowest settlement since Jan. 22, 2007. The more active January futures contract was down 90 cents, or 1.7 percent, at $53.20 a barrel. December futures expire at the close of trading today.

``Everyone is looking at the demand and seeing it as a reason to sell,'' said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. ``People are looking at the Dow as an indication of how the economy is doing.''

Japan Exports Drop
In the latest evidence that the global recession is deepening, exports from Japan dropped at the fastest pace in almost seven years in October. Japan, the world's largest oil importer, fell into a recession last quarter.

Singapore will tomorrow confirm it entered a recession last quarter, joining Japan and Hong Kong. Gross domestic product in Asia's biggest oil-trading center declined at an annualized 6.3 percent pace from the second quarter, when it shrank 5.7 percent, according a Bloomberg survey.

Slipping oil and commodity prices caused the shares of explorers and producers to decline. Woodside Petroleum Ltd. fell 5 percent to A$32.25 in Sydney, its lowest price in three years. Cnooc Ltd. plunged 40 Hong Kong cents, or 7.2 percent, to HK$5.14.

U.S. Inventories
Oil prices also fell as U.S. crude inventories climbed because of declining demand for fuels. Crude-oil supplies rose 1.6 million barrels to 313.5 million barrels last week, the Energy Department said yesterday. Stockpiles were forecast to rise 1 million barrels, according to a Bloomberg News survey of analysts.

Gasoline inventories rose 539,000 barrels to 198.6 million barrels in the week ended Nov. 14, the report showed. Analysts surveyed by Bloomberg News were split over whether supplies of the motor fuel increased or declined.

U.S. fuel demand fell 5.2 percent in the first 10 months of this year, the biggest drop since 1981, the American Petroleum Institute said in a report yesterday.

Brent crude oil for January settlement fell as much as 97 cents, or 1.9 percent, to $50.75 a barrel on London's ICE Futures Europe exchange. It was at $50.80 a barrel at 2:44 p.m. Singapore time. The contract yesterday declined 12 cents to $51.72 a barrel, the lowest settlement since Jan. 11, 2007.

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