Oil prices rally on weak dollar

November 16, 2009
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, LONDON, Nov 16 – Oil prices advanced on Monday, as traders took their cue from the weak dollar and rising global equities, and as OPEC signalled that 75-80 dollars a barrel was a satisfactory level for crude.

New York\’s main contract, light sweet crude for delivery in December, added 90 cents to 77.21 dollars a barrel.

Brent North Sea crude for January delivery gained 87 cents to 77.22 dollars a barrel in London trading.

Later on Monday, traders would focus on a barrage of US economic data for the latest reading on health of the world\’s biggest energy-consuming nation.

"Market participants will be keeping an eye on economic figures, global equity markets and US dollar to find direction for crude oil prices," said analysts at the Sucden Financial Research brokerage in London.

"Today, investors will be watching NY Fed data, US retail sales as well as business inventories figures."

The US dollar fell Monday as China accused the United States of increasing protectionism and following unexpectedly strong Japanese economic growth figures, pushing gold prices to a record high point.

As the dollar dropped in value against the euro and yen, gold struck an all-time peak of 1,133.20 dollars an ounce.

The struggling greenback makes dollar-denominated commodities — like gold and crude oil — cheaper for buyers using stronger currencies. In turn, that tends to lift demand and prices.

In London trading, the European single currency surged close to 1.50 dollars.

"Seventy-five to 80 dollars a barrel is a good price… for the recovery of the world economy," OPEC president Jose Maria Botelho de Vasconcelos said Monday.

De Vasconcelos, who is also Angola\’s oil minister, was speaking at a conference on Gulf energy security in Abu Dhabi.

He also said the rate of compliance by OPEC members with their production quotas "is around 65 percent." This rate is satisfactory, he added.

The Organization of Petroleum Exporting Countries (OPEC), whose members pump about 40 percent of the world\’s oil, will review production quotas at a key meeting in Luanda, Angola, on December 22.

"This situation will be discussed" at the December meeting, he added.
He also told reporters on the sidelines of the conference that "the market is oversupplied."

OPEC expects oil demand to rise by 20 million barrels a day (bpd) to 106 million by 2030, he said, but warned of uncertainty in the market.

The oil market was also boosted on Monday by news that Japan\’s economy grew 1.2 percent in the third quarter of 2009 from the previous quarter — the fastest pace in two-and-a-half years and much better than expected.

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