June 16 (Bloomberg) -- Palm oil had the best advance in more than three weeks as crude oil extended a rally in Asian trading, lifting the appeal of the vegetable oil as a source of alternative fuel.

Palm oil for August delivery advanced 1.2 percent to 2,420 ringgit ($743) a metric ton on the Malaysia Derivatives Exchange. Crude oil in New York climbed as much as 0.3 percent to $77.19 a barrel, extending yesterday’s 2.4 percent rise, and was $76.69 at 6:28 p.m. Singapore time. Vegetable oils tend to track crude oil as they can be used to produce biofuels.

The MSCI Asia Pacific index climbed 1 percent, for a fifth day of gains, aiding confidence, analysts said. Still, palm oil’s fundamentals do not favor further gains, they said.

“I don’t think there will be much excitement for palm oil” and it’s “likely to stay range-bound between 2,400 and 2,600 ringgit over the next couple of months,” said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn Bhd.

Soybeans for November delivery added 0.6 percent to $9.2075 a bushel in Chicago, while December-delivery soybean oil gained for a fourth day, rising 0.3 percent to 39.02 cents a pound. Its premium over palm oil jumped to $117.69 a ton, from $85.20 at the end of last week, according to Bloomberg data.

CME Group Inc.’s September-delivery palm oil contract, which is pegged to the Malaysian benchmark price, was little changed at $730.75 a ton. The Dalian Commodity Exchange is closed for a public holiday and reopens tomorrow.

The outlook for palm oil is poor because “beans could head towards $8.50 to $8.75 through the second half,” although disruptions caused by the weather may contribute to a speculative rally, said Scott Briggs, a agricultural commodities strategist at Australia & New Zealand Banking Group Ltd.

OilWorld raised its forecast for the world output of 10 oilseeds for 2010-2011 to 438.8 million tons, from 438.7 million last year, raising its Argentina soybean estimate by 0.7 million tons to 55 million tons.

Soybean stocks will be “substantial” until August, which will have a bearish impact on edible oils prices, it added.