UPDATE 5-Oil climbs towards $50 on equities, weak dollar

                                
 * European stock markets slightly firmer [.EU]
                                
 * Euro extends gains against the dollar [USD/]
                                
 * U.S. crude stocks highest in 19 years, refinery runs up
                                
  
 (Updates prices, adds dollar)
                                
 By Christopher Johnson
                                
 LONDON, April 23 (Reuters) - Oil rose $1 a barrel on
Thursday as the dollar weakened and a rally in European equities
encouraged investors to focus on the prospects for a rebound in
oil demand once the economic crisis begins to ease.
                                
 Sentiment on the economy and oil demand has been solidly
bearish in recent months and the International Monetary Fund on
Wednesday slashed its outlook for this year, forecasting the
deepest recession since World War II.
                                
 But the second quarter is traditionally the weakest of the
year for oil demand and many traders expect a strengthening in
supply and demand fundamentals towards the end of the year.
                                
 U.S. crude <CLc1> was up 95 cents at $49.80 a barrel by 1153
GMT, after dropping as much as 48 cents in early Asian trade.
London Brent crude <LCOc1> was up 61 cents to $50.42.
                                
 "We're coming into Q2, gasoline demand is going to increase,
refining rates are going to go up and I expect inventories will
be tapering off," said Kevin Norrish, oil analyst at Barclays
Capital, explaining why some investors predict oil prices will
strengthen.
                                
 Bolstering sentiment for oil was a rally in European stock
markets, which turned positive mid-morning on commodity shares
and after results for Credit Suisse <CSGN.VX> and Novartis
<NOVN.VX> pleased investors. [.EU]
                                
 The dollar weakened against a basket of other major
currencies. A falling dollar can boost the appeal of oil and
commodities to investors.
                                
 
                                
 FUNDAMENTALS
                                
 Stock markets tend to lead sentiment in commodities markets
as investors monitor them as a distillation of views on the
prospects for the economy.
                                
 But oil fundamentals, at least in the short and medium term,
remained bearish.
                                
 The IMF forecast on Wednesday that the global economy would
shrink by 1.3 percent this year, sharply weaker than the 0.5
fall it predicted in January. [ID:nN21500818]
                                
 Underlining the weak demand, crude stockpiles in the world's
top energy consumer jumped to a fresh 19-year high last week,
the U.S. Energy Information Administration said, despite a 3
percentage point rise in refinery utilisation rates. [EIA/S]
                                
 The weak economy has slashed demand and pulled oil back from
its record high above $147 per barrel hit in July last year,
with expectations for growth continuing to be slashed.
The Royal Bank of Scotland (RBS) <RBS.L> said on Thursday it
cut its oil price forecasts for 2009 and 2010.
                                
 RBS now sees Britain's North Sea Brent crude averaging
$56.10 per barrel this year, down from a previous forecast of
$80 a barrel, but expects prices to recover to $75 in 2010,
compared with an earlier forecast of $76.25.
                                
 "OPEC's production restraint will create a tighter market,
which we believe will progressively lift oil prices this year,
although the rate of recovery should be somewhat slower than
previously assumed," the bank said.
                                
 Brent prices <LCOc1> have averaged $46.87 so far this year.
                                
 (Additional reporting by Chua Baizhen in Singapore and
Barbara Lewis and Alex Lawler in London; editing by William
Hardy)