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Oil Tops $83 as Dollar Drop Lifts Interest in Commodities - ASHARQ AL-AWSAT English Archive
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SINGAPORE (Reuters) – Oil rose for a second straight session on Monday to top $83 as the dollar extended 15-year lows versus the yen and weakened against the euro, bolstering the appeal of commodities as an alternative investment.

U.S. crude for November climbed 50 cents to $83.16 a barrel by 2:46 a.m. ET, after rising as much as 1.1 percent earlier to $83.50. Prices touched a five-month intra-day high of $84.43 last week. ICE Brent gained cents to $84.58.

Weak U.S. jobs data for September last week strengthened the case for further monetary stimulus to boost the struggling economy, as world financial leaders over the weekend sought to defuse mounting tensions over currencies.

“The dominant theme is the dollar,” said David Taylor, an analyst at CMC Markets in Sydney.

“The U.S. economic data hasn’t surprised to the upside for some time, and if the data continues to disappoint, investors will see that as a case for more stimulus.”

Expectations that the U.S. Federal Reserve will inject more money into the economy before the end of the year are adding pressure on the battered dollar, which renders oil cheaper for holders of other currencies.

Money managers’ net long crude oil positions on the New York Mercantile Exchange jumped to more than 165,000 in the week to October 5, the highest since April, the Commodity Futures Trading Commission said on Friday, from about 107,000 a week earlier.

Some analysts say the increase shows the near 9 percent rally in crude prices over the same period was largely driven by investment money.

“It’s a bit of a risky market,” Taylor said. “If there is further money printing and it has a limited impact on the economy, you are left with fewer policy levers to work with and that will make markets very nervous.”

The market will seek further clues to developments in the U.S. economy from the release of the minutes for the last Fed meeting on Tuesday, China trade data on Wednesday, and U.S. retail sales for September on Friday.

OPEC SIGNALS NO CHANGE

OPEC is unlikely to change oil output targets when it meets in Vienna on Thursday, delegates told Reuters on Sunday, while Qatar said current oil prices posed no harm to the world economy.

Oil has stayed in a price range of $70 to $80 a barrel for most of this year — judged by the Organization of the Petroleum Exporting Countries to be high enough for producers who need to invest and low enough not to damage the world’s economy.

Saudi Arabia, OPEC’s top crude exporter, will supply full contracted volumes of crude oil in November to at least five term buyers in northeast Asia, steady with October levels, traders with the refiners said on Monday.

Total’s La Mede oil refinery in the south of France was partially shut on Sunday as Marseille port workers continued their strike for a fourteenth day. Total said the lack of crude oil had also started to affect its 117,000 barrels per day Feyzin refinery in the Lyon region.

The port strike is expected to continue this week and on Tuesday French unions have called for a general strike across the country to protest against pension reform.

Refinery shutdowns curtail crude requirements, but reduced fuel output may strain oil product markets in Europe, curbing a surplus of gasoline that is usually shipped to the U.S. and raising gas oil import needs. Both gasoline and heating oil futures gained on the New York Mercantile Exchange on Monday.

Enbridge Inc’s 670,000 barrel per day (bpd) pipeline 6A was back in operation on Sunday after a one-day shutdown to prevent a leak in the main artery for Canadian crude imports into the U.S.

The U.S. dollar slid to 15-year lows versus the yen earlier on Monday, with the greenback down 0.33 percent against a basket of currencies.

But a chance remained that Japan could enter the market to cap the yen’s rise, though some dollar bids in thin trade during a Japan and U.S. holiday on Monday put a floor under the pair for now.

Emerging powers won a battle on Saturday for heightened IMF scrutiny of rich countries’ economic policies as world financial leaders sought to defuse mounting tensions over currencies.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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