Oil rises above US$79 amid dollar volatility | Shanghai Daily

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Oil rises above US$79 amid dollar volatility

CRUDE oil prices rebounded yesterday after three straight days of declines, offsetting an unexpected slump in consumer confidence.

Benchmark crude for December delivery rose 87 cents to settle at US$79.55 a barrel on the New York Mercantile Exchange.

Crude jumped to a 12-month high at US$82 a barrel last week as the dollar weakened amid concerns that massive global stimulus spending will eventually spark inflation.

The dollar has lost more than 15 percent of its value since March.

Because crude is bought and sold with dollars, investors who hold euros or other currencies that have strengthened against the dollar can essentially buy more crude with less.

Some economists expect the dollar and oil to stabilize over the next three to six months as inflation fears ease.

The dollar was mixed in yesterday trading after a report showed U.S. consumers' confidence dropping this month, raising doubts about the vitality of the economy's recovery. The 16-nation euro dropped to US$1.4809 in late New York trading from US$1.4859 late Monday. The British pound rose to US$1.6386 from US$1.6303. Meanwhile, the dollar edged up to 92.81 Japanese yen from 92.21 yen.

The Consumer Confidence Index, released by The Conference Board, sank unexpectedly to 47.7 in October - its second-lowest reading since May.

Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow.

An Energy Department report due Wednesday will likely show that U.S. stockpiles of crude oil rose last week, but supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined, according to analysts.

In other Nymex trading, heating oil rose 2.16 cents to settle at US$2.0523 a gallon. Gasoline for November delivery advanced 3.67 cents to US$2.0705 a gallon, while natural gas for November delivery rose 4.4 cents to settle at US$4.557 per 1,000 cubic feet.

In London, Brent crude for December delivery settled 66 cents higher at US$77.92 on the ICE Futures exchange.



 

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