Oil prices rise again with falling dollar
Oil prices rose last week as the dollar continued to weaken and
stocks tried to hold their ground after Tuesday's big rally.
Benchmark crude added 41 cents to settle at $83.23 a barrel on the
New York Mercantile Exchange.
Gasoline pump prices climbed as well, to a national average of $2.751
for a gallon of regular, according to AAA, Wright Express and oil Price
Information Service. That's up almost two cents from Tuesday and 29
cents higher than a year ago. In Houston today, drivers paid an average
of $2.561 a gallon, up from $2.546 Tuesday.
Gas has been following oil higher over the past week as stock markets
rallied and the dollar fell. Crude traders often look to stock markets
as a measure of overall investor sentiment, while oil, priced in
dollars, gets cheaper for investors with foreign currencies when the
dollar drops.
The dollar continued its decline against the euro today. The
connection between the two currencies has been one of the closest
indicators of the direction of oil prices recently. Stock markets tried
to hold on to Tuesday's sizable gains. The Dow Jones Industrial Average
was up about 17 points in afternoon trading. The NASDAQ and the S&P 500
were down a little.
The Energy Information Administration said that crude inventories
increased last week by 3.1 million barrels, or 0.9 percent, to 360.9
million barrels.
That is 7 percent above year-ago levels. Analysts expected a drop of
1.3 million barrels, according to a survey by Platts, the energy
information arm of McGraw-Hill Cos.
Platts senior oil analyst Linda Rafield said the rise in crude
supplies was the result of a slowdown in refinery operations, which
allowed inventories to build. The EIA report said refineries operated at
83.1 percent of capacity, down 2.7 percent from the previous week.
Although the increase in crude supplies did not seem to faze traders,
energy consultants Cameron Hanover noted that the "DOE report and then
Friday morning's monthly unemployment numbers could really make or break
the course of this market.
We seem to have a bull market, although crude still needs to break
and settle (preferably twice) above $83.00." Most analysts expect the
jobless data to show the U.S. economy is not creating a significant
amount of jobs. "Based on the fundamental data, the market is still
amply supplied with crude oil," Commerzbank said in a report, adding
that a "majority of OPEC members prefer a price range from $70 to $80."
More tropical storms are brewing in the Caribbean, although current
forecasts do not put them on a course to disrupt oil and gas production
in the Gulf of Mexico. Natural gas rose 12.2 cents to settle at $3.865
per 1,000 cubic feet.
In other Nymex trading in November contracts, heating oil gained 0.52
cent to settle at $2.3078 a gallon and gasoline added 3.04 cents to
settle at $2.1559 a gallon.
In London, Brent crude rose 22 cents to settle at $85.06 a barrel on
the ICE Futures exchange.
(AP)
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