BLBG: Oil Rises as Weaker Dollar, Recovery Signs Spur Weekly Gain
By Grant Smith
Nov. 6 (Bloomberg) -- Crude oil rose in New York and was poised for a weekly gain on increasing signs the recovery is taking root, while a weaker dollar heightened crude’s appeal as a hedge against inflation.
Futures are heading for a 4.1 percent gain this week before an October report forecast to show that the U.S. lost the fewest jobs in more than a year. European equities advanced a third day. U.S. crude-oil stockpiles fell twice as much as analysts predicted last week, a Nov. 4 Energy Department showed.
“The expectation that we will see some stabilization in the world economy is already priced in,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “We’ll see this range between $70 and $80 for the rest of the year, especially as the dollar is likely to stay weak going forward.”
Crude oil for December delivery rose as much as 72 cents, or 0.9 percent, to $80.34 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.93 a barrel at 11:10 a.m. London time. Futures have advanced 80 percent this year.
Europe’s Dow Jones Stoxx 600 Index added 0.1 percent to 240.72 as of 10:55 a.m. in London, heading for the first weekly gain in three weeks. Yesterday, the Dow Jones Industrial Average closed above 10,000 for the first time since Oct. 22.
U.S. employers probably cut the fewest jobs in October in more than a year as the economic recovery eased the worst labor- market slump since the 1930s, economists said before the Labor Department payrolls report, due at 8:30 a.m. today in Washington.
‘Recovery Phase’
Payrolls fell by 175,000 workers, the smallest drop since August 2008, according to the median estimate of 84 economists surveyed by Bloomberg News. The jobless rate may have climbed to a 26-year high of 9.9 percent, the survey also showed.
“If you look at the trend over the past eight months, we’re certainly in a recovery phase,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are forecasts out there for $85 to $90 by year’s end, which I would say aren’t too far off the mark.”
The dollar weakened to $1.4894 against the euro at 10:57 a.m. in London. Yesterday it touched $1.4917, the weakest level since Oct. 27. The dollar’s decline bolsters the attractiveness of commodities as an alternative investment.
U.S. crude oil stockpiles fell 3.94 million barrels last week, more than reversing inventory gains made over the previous three weeks, the Energy Department said Nov. 4. An increase of 1.5 million barrels was forecast, according to a Bloomberg News survey of analysts.
Oil analysts and traders were split over whether crude oil prices will rise or fall next week, as investors focus on a weak dollar and ample product stockpiles.
‘Still Lagging’
Fourteen of 35 respondents polled by Bloomberg News, or 40 percent, said futures will drop through Nov. 13. Fourteen predicted that oil will rise, while seven said prices may be little changed. Last week, 44 percent of survey respondents said the market would fall.
“The big move from $65 to $80 was due to a lot of buying from very large speculators, linked to the dollar and equities,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix GmbH. “It’s difficult to find fundamental justification for these prices. Demand in the U.S. is still lagging.”
Brent crude oil for December settlement rose as much as 82 cents, or 1.1 percent, to $78.81 a barrel on the London-based ICE Futures Europe exchange. The contract was at $78.41 a barrel at 11:10 a.m. in London.
